The country's debt service registered a record P1.6 trillion last year, exceeding the program, as the government aggressively moved to cut mounting obligations.

Data from the Bureau of the Treasury showed the government jacked up its debt payments in 2023 by 24 percent to a high of P1.6 trillion, from P1.29 trillion it paid in 2022.

For December alone, the government settled P68.87 billion in order to meet and exceed by 3.3 percent the debt service program at P1.55 trillion under the General Appropriations Act last year.

The Treasury said the debt service was driven by the 25 percent increase in interest payments to P628.33 billion from P502.86 billion in 2022.

On the other hand, amortization jumped by 23.4 percent to P975.28 billion last year from P790.32 billion the year prior.

Spending on amortization goes to returning the loan principal, while interest payments go to complying with interest obligations.

Nearly 70 percent of the interest payments at P435.74 billion were issued to domestic creditors.

Broken down, the government paid the interest for P263.18 billion in fixed-rate Treasury bonds (T-bonds), P149.74 billion in retail T-bonds and P17.17 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 P192.59 billion in interest owed to foreign financiers last year.

Meanwhile, about 88 percent of the total amortization at P854.17 billion was remitted to domestic sources while the remaining P121.11 billion in principal payments were made to external creditors.

Data showed that the government exceeded by three percent or P17.67 billion the interest payments set for 2023 which was only at P610.67 billion.

Likewise, it managed to surpass its payments for amortization by four percent or P33.93 billion from the original target of P941.35 billion.

This brought the total debt service to P1.6 trillion, up by a little over P50 billion from the P1.55 trillion that the government had planned.

For 2024, the government intends to spend P670.47 billion for interest payments on a 70:30 mix in favor of domestic creditors.

It will also return P1.24 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 P1.91 trillion in debt servicing.

The government aims 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 P14.79 trillion as of end-January.


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