Govt debt payments hit P 34B in June

SMALLER interest payments and amortization expenses dragged the national government’s debt servicing in June by more than half of the payments done a year ago, data released by the Bureau of the Treasury showed.

Debt payments in June settled at P34.38 billion, a 58.97-percent decline from the P83.81 billion recorded a year earlier.

Interest payments, which accounted for 80.14 percent of the total, decreased by 5.27 percent to P27.56 billion from P29.09 billion last year.

Domestic interest payments, however, picked up by 4.97 percent to P24.61 billion in the month from P23.45 billion in the previous year, while foreign ones rose by 20.89 percent to P6.82 billion from P5.64 billion.

Amortization expenses, meanwhile, shrank by 87.52 percent to P6.82 billion from P54.71 billion a year ago. Foreign amortization accounted for the total as no domestic amortization was posted during the month.

Year- to- date, debt payments soared by 42.07 percent to P547.34 billion from P385.25 billion in the same period in 2019.

Last year, the government paid P842.44 billion to creditors, a 13.87-percent surge from P725.58 billion in 2018.

The Treasury bureau earlier reported that the national government’s outstanding debt soared anew to breach the P9- trillion mark at the end of last month on the back of higher domestic and foreign borrowings to fund its coronavirus disease 2019 (Covid-19) pandemic programs.

The actual P9.05 trillion in government debt as of end-June was up by 1.8 percent or P163 billion from the P8.89 trillion in May.

Of the total, 32 percent was generated from foreign creditors and 68 percent was raised locally.

Domestic obligations reached P6.19 trillion, 2.6-percent higher than the end-May figure of P6.03 trillion, while foreign debt grew by 0.3 percent to P2.86 trillion.

Finance Secretary Carlos Dominguez 3rd earlier said the Philippines is capable of paying its growing number of loans that were mostly used to support the government’s response to the Covid-19 pandemic.

“Because our economy has slowed down during the Covid crisis, we have not been able to collect taxes as we had planned… and we have also been spending a lot of money on our Covid response,” Dominguez

said, adding the government had spent about P375 billion on that response alone.

“Because our collections are down and our expenses are up, we had to borrow money,” he said.

According to him, the government had planned to raise the country’s debt to 50 percent of gross domestic product this year from 39 percent in 2019 to take advantage of low interest rates.

The repayment of the loans, Dominguez said, would come from tax collections once people start working and reopen their businesses, which would eventually lead to economic recovery.

“The debt is very manageable and it is affordable for us,” he said.

“So I’d like to assure the entire Filipino people that we have the capacity to borrow. We are borrowing at very low rates, and we have the capacity to pay these loans in the future,” Dominguez said.