Debt payment surges 24% in July
Government debt payment surged by nearly a quarter in July this year due to higher amortization, data from Bureau of the Treasury showed.
In July, the treasury bureau reported that total debt servicing of the national government increased 24 percent to 66.57 billion from 53.68 billion in the same month last year.
During the month, government amortization reached 13.49 billion, higher by 147 percent year-on-year from 5.46 billion. Of the amount, payments to domestic lenders amounted to 11.69 billion, while 3.85 billion was to offshore investors.
Amortizations to local lenders surged 203 percent in July, while payments to foreign investors increased 12.5 percent from the previous year.
On the other hand, government interest payments grew 10 percent from 48.22 billion last year to 53.08 billion. Of the amount, domestic lenders cornered 27.46 billion, while 25.62 billion was used to service offshore debts.
Since 2010, the Aquino administration has been borrowing more from the local market due to strong liquidity in the financial system. This is also in line with the government’s strategy to trim foreign currency debt, lengthen maturities, and pare down borrowing costs.
In the first seven-months of the year, the government’s total debt payments stood at 391.38 billion, higher by 12 percent compared with 349.3 billion in the same period in 2014.
At end-July, interest payment was almost unchanged year-on-year at 209.2 billion, while amortization increased 29 percent to 182.18 billion from 141.34 in the previous year.
Earlier, the treasury reported that the national government borrowed less in July due to very manageable fiscal deficit this year.
During the month, the national government borrowed only 33.4 billion from both local and foreign sources, down 45 percent compared with 60.57 billion in the same month a year ago.
The decline in July borrowings was mainly due to the 81 percent drop in external financing, the treasury reported.
Meanwhile, total government gross borrowings in the first seven-months also declined by 6 percent to 219.63 billion from 233.77 billion in the same period last year.
Of the total financing at end-July, external borrowings increased 16 percent year-on-year to 100.84 billion, while local financing dropped 20 percent to 118.79 billion from 148.07 billion a year ago.
The national government continues to borrow money from domestic and foreign banks to bridge the projected annual budget deficit. Offshore financing, meanwhile, includes cheap loans from bilateral and multilateral lending agencies.
Earlier, the treasury reported that the national government’s outstanding debt increased by 2.9 percent as of July this year to 5.847 trillion from 5.683 trillion in the same month a year ago.
The increase in debt was primarily due to the 3.2 percent year-on-year hike in foreign debt, which is attributable to weaker local currency against the US dollar.