Gov’t debt payment fall 38% in August

MANILA, Philippines – Lower payments for amortization have pulled down the national government’s debt payment by 38% in August compared to the same period in 2013.

The government spent P25.29 billion ($565.13 million*) to service its debts in August, lower than the P40.89 billion ($913.85 million) recorded in the same period in 2013, the Bureau of the Treasury reported.

Principal payments led the decline, dropping to P4.7 billion ($105.01 million) from P22.66 billion ($506.26 million) a year ago.

For August, the total amortization paid to local lenders amounted to P718 million ($16.04 million) while P3.98 million ($88.96 million) was paid to foreign lenders.

Interest payments in August increased to P20.6 billion ($460.48 million) from P18.23 billion ($407.46 million) in the same period in 2013.

Of the said amount, domestic creditors were paid P15.89 billion ($355.16 million)  and P4.71 billion ($105.27 million) for international debt.

For the first 8 months of 2014, the government’s debt payments also fell by 29% to P303.23 billion ($6.67 billion), from the P425.09 billion ($9.49 billion) in the same period in 2013.

Amortization payments amounted to P74.67 billion ($1.67 billion), while interest payments took up the remaining P228.56 billion ($5.11 billion).

The Department of Finance previously said that as a portion of expenditures, interest payments in August increased by 13% year-on-year due to higher domestic payments, offsetting the contraction in external interest payments.

As of end-August, interest payments’ share to revenues dropped to 18% from 20.1% last year, the DOF said.

Interest payments as a percentage of expenditures fell to 17.6% from 18.7% last year.

The Aquino administration has allotted P763.25 billion ($17.05 billion) to pay for its local and international debts that are scheduled to mature in 2015, data from the Department of Budget and Management showed.

Based on the proposed Budget of Expenditures and Sources of Financing for 2015, the government’s programmed debt payments for next year is projected to be 6.83% lower than the P819.19 billion ($18.30 billion) set for 2014.

Of that amount, 51% will be spent for amortization, while the remaining 49% will be for interest payments. – Rappler.com