Government increases debt repayments in May

MANILA, Philippines — The government increased debt repayment for the first time in six months in May to 57 billion pesos, as it continues its decision to reduce its obligations in line with fiscal consolidation.

Debt service more than halved to 57.44 billion pesos in May, from 37.8 billion pesos a year ago, according to the Treasury Office, thanks to a triple-digit jump in debt. ‘amortization.

Broken down, interest payments increased by 17% to 33.83 billion pesos from 28.93 billion pesos, while amortization or settlement of principal nearly tripled to 23.61 billion pesos from 8.87 billion pesos.

The bulk of the interest payments, 28.87 billion pesos, went to domestic creditors.

Based on the data, the government paid the interest of P19.41 billion in fixed rate treasury bills, P7.94 billion in retail treasury bills and P1.53 billion in notes. of the Treasury.

The Treasury sells securities every week to generate funds for public programs and projects.

Treasury bills with terms of 91 days, 182 days and 364 days are offered every Monday, while Treasury bonds with terms up to 20 years are auctioned every Tuesday.

In addition to settling local lenders, the government settled 4.96 billion pesos in interest owed to foreign financiers in May.

On the other hand, all of the 23.61 billion pesos in amortization was returned to external creditors, as no principal payments were made to domestic sources during the month.

The debt payments in May marked the first time since November last year that the government has increased its settlements on an annual basis.

However, at the annual level, debt service fell by 34% to 414.07 billion pesos in the five months ending in May, compared to 623.6 billion pesos during the same period in 2021.

While interest payments increased by 23% to P220.46 billion, amortization decreased by 56% to P193.61 billion.

The government must pay a total of 882.93 billion pesos over the remaining seven months of the year to meet its obligations.

For 2022, the government plans to settle a record 1.3 billion in debt, split into 512.59 billion pesos for interest payments and 785.81 billion pesos for amortization.

Debt payments rose 25% to 1.2 trillion pesos last year, from 962.47 billion pesos in 2020, as the government began repaying some of the loans it acquired for the response to the pandemic.

The government intends to improve its revenue administration and eliminate wasteful spending to consolidate its fiscal position and thereby reduce the debt burden.

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