February’s debt service bill has fallen, BTR says

The national government’s debt service fell 21.85 percent year-on-year in February due to lower principal payments, the Bureau of the Treasury (BTr) said this weekend.

BTR data showed that debt service fell to P293.615 billion in February from P375.714 billion in the same month a year ago.

But month-on-month, debt payments rose 84.78 percent, compared to P158.898 billion in January.

Of the total debt service in February, the largest share, or 83.71 percent, went to repayments. The remaining 16.29 percent went to interest payments.

The repayment, also known as redemption, fell year-on-year to 245.788 billion euros for February alone, compared to 341.605 euros a year ago. But it is up month-on-month from P84.677 billion in January.

Domestic debt principal payments fell 19.72 percent to P243.625 billion in February from P303.461 billion a year ago.

Write-downs on foreign bonds fell 94.32 percent to P2.163 billion in February from P38.144 billion in the previous year.

Interest payment

Meanwhile, interest payments rose 40.21 percent year-on-year to P47.827 billion in February from P34.109 billion a year ago.

Month-on-month, interest payments fell 35.56 percent from P74.221 billion in January.

Broken down, interest on local debt rose 56.67 percent to P34.350 billion from P21.924 billion a year ago.

Domestic interest payments consisted of P21.676 billion in fixed-rate government bonds, P7.734 billion in retail government bonds, P3.264 billion in government bonds and P1.676 billion in other expenses.

In the first two months of the year, debt service amounted to 452.513 billion euros, 6.83 percent higher than 423.551 billion euros in the same period last year.

Depreciation payments during the January to February period decreased 3.50 percent to P330.465 billion from P342.466 billion in the same period last year.

Meanwhile, total interest payments rose 50.53 percent to P122.048 billion in the two-month period from P81.079 billion a year ago.

Michael Ricafort, chief economist of Rizal Commercial Banking Corp., said in a Viber message that there are relatively fewer maturing government bonds in February 2024 compared to major maturities a year ago.

“Much larger maturities/redemptions of government bonds a year ago (…) resulted in a dramatic decline in government debt in February 2024,” Ricafort said.

“Payment of a larger amount of principals a year ago (February 2023) also slightly reduced interest payments for February 2024,” Ricafort added.