National Government (NG) debt service rose year on year in November as both interest and principal payments rose, data from the Bureau of the Treasury (BTr) showed.
NG’s debt service rose 65.3% to P93.704 billion in November from P56.674 billion in the same month a year ago.
Month-on-month, debt service fell 56.8% from P216.85 billion in October.
Debt service refers to payments made by the national government on its domestic and foreign debts.
Interest payments represented the largest share, or 71%, of debt payments in November.
BTR data shows that interest payments rose 37.3% to P66.653 billion in November from P48.548 billion in the previous year.
Local debt interest rose 38.8% to P48.929 billion in November from P35.257 billion in the same month in 2023.
Domestic interest payments consisted of P29.512 billion in fixed-rate government bonds, P16.872 billion in retail government bonds and P2.017 billion in treasury bills (T-bills).
Interest paid to foreign creditors rose 33.4% year-on-year to P17.724 billion in November from P13.291 billion.
Department of Finance data shows depreciation more than tripled (232.9%) to P27.051 billion in November from P8.126 billion in the same month last year.
Domestic debt repayments shot up to P18.297 billion from P96 million the year before.
On the other hand, external debt repayments increased by 9% from P8.03 billion in 2023 to P8.754 billion.
11 MONTHS DEBT SERVICE
In the January-November period, the NG debt service bill rose 27.3% to P1.95 trillion from P1.53 trillion in the same period last year.
Depreciation payments rose 29.2% to P1.25 trillion as of end-November from P967.09 billion a year ago. It accounted for 63.9% of the total debt burden.
Broken down, domestic debt repayments stood at P1.02 trillion, while external payments were recorded at P230.973 billion.
Meanwhile, interest payments rose 24.3% to P705.334 billion in the eleven-month period from P567.655 billion a year ago.
Interest payments on domestic debt amounted to P502.389 billion, while those on external debt amounted to P202.945 billion.
“The sharp year-on-year increase in NG debt service could be attributed to longer debt maturities,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said. in a Viber message.
He also cited relatively high interest rates and a weaker peso pushing up foreign debt payments.
The peso closed at P58.62 against the dollar at the end of November, falling 52 centavos from P58.1 at the end of October.
The local unit also fell to a record low of P59 per dollar twice during the month, on November 21 and 26.
“This also reflected the broader NG budget deficit during the period when more NG borrowings were needed, especially some short-term borrowings such as government bonds,” he added.
Separate BTR data shows the budget gap more than doubled from $93.3 billion a year ago to €213 billion in November.
This brought the 11-month budget deficit to P1.18 trillion, higher than last year’s P1.11 billion deficit. It also accounted for 79.29% of the P1.5 trillion deficit ceiling for 2024.
“NG debts have risen sharply since 2020 following the COVID-19 (coronavirus disease 2019) pandemic and some of them have already started to mature, leading to higher debt service costs,” Mr Ricafort added.
The latest data from the BTr showed that the NG’s outstanding debt rose to a new high of P16.09 trillion at the end of November.
The debt stock is expected to reach P16.06 trillion by the end of 2024 and P17.35 trillion this year. — Luisa Maria Jacinta C. Jocson