Government debt payments drop 33% in January despite rising interest costs

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The Marcos administration's debt payments dropped in the first months of the year, primarily attributed to a substantial decline in principal payments, which offset the rise in interest expenses.

Data from the Bureau of the Treasury (BTr) revealed that the Philippine government's total debt payments amounted to ₱106.5 billion in January 2025, a reduction of ₱52.4 billion, or approximately 33 percent, compared to the ₱158.9 billion recorded in January 2024.

A major factor contributing to the decline was the sharp drop in amortization payments. Specifically, amortization fell to ₱2.1 billion, only two percent of the total debt payments, starkly contrasting the ₱84.7 billion (53 percent) observed in January 2024. This translates to a ₱82.6 billion decrease or a 98 percent decline.

While domestic creditor payments posted an increase to ₱317 million from ₱138 million in the previous year, the overall reduction was largely due to decreased foreign debt payments.

Domestic payments rose by ₱179 million, or nearly 130 percent, while foreign debt payments decreased by ₱82.7 billion, or nearly 98 percent, dropping from ₱84.5 billion to ₱1.8 billion.

Conversely, interest payments increased to ₱104.4 billion in January, accounting for over 98 percent of the total debt payments. This represents a ₱30.2 billion, or approximately 41 percent, increase from the ₱74.2 billion recorded in January 2024.

Both domestic and foreign interest payments registered increases. Domestic interest payments rose by ₱23.5 billion (over 48 percent) to ₱72.3 billion from ₱48.8 billion, with the breakdown as follows: ₱63.7 billion for fixed-rate Treasury bonds (T-bonds), ₱3.6 billion for retail T-bonds, ₱3.2 billion for Treasury bills (T-bills), and ₱1.8 billion for other national government obligations. Foreign interest payments increased by ₱6.7 billion (over 26 percent) to ₱32.1 billion from ₱25.4 billion.

Additionally, government borrowings climbed to ₱213.1 billion during the period, representing a nearly five percent increase from ₱203.2 billion in the previous year. This increase was primarily driven by domestic financing.