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Louise Maureen Simeon - The Philippine Star
March 17, 2025 | 12:00am
Stock photo of a peso money bill.
Philstar.com / Jovannie Lambayan
MANILA, Philippines — The country’s debt service hit a record P2 trillion last year, largely on principal payments, as the government moved to cut mounting obligations.
Data from the Bureau of the Treasury showed that the government jacked up its debt payments in 2024 by 26 percent to P2.02 trillion, from the P1.6 trillion it paid in 2023.
The debt payment was P6 billion short of the P2.026 trillion debt service program under the General Appropriations Act last year.
The Treasury said the debt service was driven by the 29 percent increase in amortization or the settlement of principal to P1.26 trillion from P975.28 billion in 2023.
About 81 percent of the total amortization at P1.02 trillion was remitted to domestic sources while the remaining P239.29 billion in principal payments were made to external creditors.
On the other hand, interest payments jumped by 21 percent to P763.31 billion last year from P628.33 billion the year prior.
Roughly 71 percent of the interest payments at P539.83 billion were issued to domestic creditors.
Broken down, the government paid interest for P340.5 billion in fixed-rate Treasury bonds, P153.92 billion in retail T-bonds and P32.69 billion in Treasury bills (T-bills).
The Treasury sells government securities every week to generate funding for public programs and projects. Short-dated T-bills have tenors of 91 days, 182 days and 364 days while long-term T-bonds have maturities of up to over 20 years.
Aside from payment to local lenders, the government settled P223.48 billion in interest owed to foreign financiers last year.
Spending on amortization goes to returning the loan principal, while interest payments go to complying with interest obligations.
Data showed that the government almost hit the P763.44 billion goal set for interest payments, as well as the P1.263 trillion for amortization.
For 2025, the government intends to spend P848.03 billion for interest payments on a 74:26 mix in favor of domestic creditors.
It will also return P1.2 trillion worth of principal to comply with the amortization of debts mostly to local lenders.
This means that for this year, the government targets to hit another record P2.05 trillion in debt service expenditure.
The government intends to improve its revenue administration and eliminate wasteful spending to consolidate its fiscal position and bring down the debt pile.
The country’s outstanding debt is at a record P16.31 trillion as of end-January.
