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Debt payments nearly double to P54B in April

June 25, 2019

DEBTS paid by the government to its creditors reached P53.840 billion in April on the back of higher amortization and interest payments, according to the Bureau of the Treasury.

Bureau data released on Monday showed that the April amount was a 93.3-percent increase from P27.846 billion in the same month last year.

Bureau of Treasury. FILE PHOTO

Amortization expenses, which accounted for 56.2 percent of the total, increased by more than six times to P30.304 billion from P4.674 billion a year ago.

Domestic amortization rose to P25.952 billion, while foreign amortization decreased by 4.5 percent to P4.352 billion.

Interest payments climbed by 1.5 percent to P23.536 billion from P23.172 billion a year ago. Domestic interest payments accelerated to P16.528 billion, while foreign ones decelerated to P7.008 billion.

“Despite higher debt servicing, [the] government is still able to meet its obligations on the back of higher GIR (gross international reserves), among others,” Security Bank Corp. Assistant Vice President and chief economist Robert Dan Roces told The Manila Times in a comment.

Domestic interest payments were higher partly as an offshoot of higher policy rates, which in turn affected bond yields, he explained.

Roces said this was on the back of the government’s programmed borrowing mix of 75 percent for domestic and 25-percent foreign borrowing, “reflecting its confidence in its ability to maintain its credit worthiness and a possible further credit upgrade.”

“As government continues borrowing, these should be invested in productive areas [that] contribute to economic growth in the longer term, rather than wasteful or less productive projects,” he added.

For his part, Rizal Commercial Banking Corp. economist Michael Ricafort said the “improved fiscal position of the national government has fundamentally provided greater leeway/flexibility for more debt payments/servicing.”

Year-to-date, debt payments grew by 21.2 percent to P274.019 billion from P226.046 billion in the same period in 2018.

Amortization expenses in January to April surged by 35 percent to P142.713 billion, while interest payments increased by 9.1 percent to P131.306 billion in the same period.

The government’s outstanding debt stood at P6.874 trillion in April, down over P4 billion from a month ago because of the stronger peso and foreign currency movements.

Last year, the government forwarded P775.589 billion to creditors, a 13.9-percent increase from P680.466 billion in 2017.

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