NG debt service bill drops sharply in October

THE NATIONAL Government’s (NG) debt service bill fell sharply in October on lower amortization payments, the Bureau of the Treasury said.

Latest data from the Treasury showed that the debt service bill declined by 69.66% to P65.78 billion in October from P216.85 billion in the same month last year.

Month on month, the debt service bill slumped by 79.94% from P327.89 billion in September.

Debt service refers to the payments made by the government on domestic and foreign borrowings.

The bulk or 87.21% of debt payments were made up of interest payments, while the rest were amortization payments.

In October, amortization payments stood at P8.42 billion, down by 97.79% from P161.46 billion in the same month a year ago.

Principal payments on domestic debt plunged by 97.93% to P2.49 billion in October from P120 billion in the same month last year.

Amortization paid on foreign debt declined by 85.7% to P5.93 billion in October from P41.46 billion in the same month in 2024.

On the other hand, interest payments inched up by 3.57% to P57.37 billion in October from P55.39 billion in the same month a year ago.

Domestic interest payments increased by 18.3% to P41.8 billion in October from P35.33 billion in the same month last year.

Broken down, P32.93 billion went to interest on fixed-rate Treasury bonds, P3.81 billion to Treasury bills (T-bills), P3.58 billion to retail Treasury bonds, and P1.48 billion to others.

Interest payments for foreign borrowings slid by 22.37% to P15.57 billion in October from P20.05 billion in the same month in 2024.

“(This is) fundamentally due to much lower NG government securities/Treasury bond maturities (principal payments) to service starting October 2025 until end-2025,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message over the weekend.

Rate cuts by the US Federal Reserve and the Bangko Sentral ng Pilipinas have also tempered the government’s interest payments in recent months.

For the first 10 months of the year, the NG debt service bill grew by 3.97% to P1.93 trillion from P1.86 trillion in the same period last year.

The 10-month tally already accounted for 94.18% of the P2.05-trillion debt service program for this year.

Interest payments rose by 12.34% to P723.22 billion in the January-to-October period from P638.68 billion a year ago. This was already 85.28% of the P848.03-billion programmed interest payments for 2025.

Interest payments on domestic debt stood at P536.19 billion as of end-October, up by 18.24% from P453.46 billion in 2024.

This included P367.08 billion in fixed-rate Treasury bonds, P122.47 billion in retail Treasury bonds, and P38.21 billion in T-bills.

On the other hand, interest payments on external debt inched up by 0.97% to P187.03 billion as of end-October from P185.22 billion in the same period a year ago.

Meanwhile, amortization payments dipped by 0.87% to P1.21 trillion in the January-to-October period from P1.22 trillion. This already equaled the P1.21-trillion full-year amortization program.

Principal payments on domestic debt inched up to 0.92% to P1.01 trillion, while amortization on external debt slipped by 8.91% to P202.41 billion.

Mr. Ricafort said the government is still on track to meet its P2.05-trillion debt service program. However, the weak peso may complicate payment costs.

“The US dollar-peso rate at P58-P59 levels similar to year-ago levels… would increase the peso equivalent of the NG foreign debts to be paid, both principal and interest payments when converted to pesos,” Mr. Ricafort added.

For 2026, Mr. Ricafort noted there are around P200 billion in maturing securities in both February and April, which would increase NG debt servicing.

National Treasurer Sharon P. Almanza earlier said the weak peso may hurt the NG’s efforts in bringing down the NG outstanding debt to P17.36 trillion by yearend, as the forecast had assumed a lower foreign exchange rate.

Last week, the NG debt stock ballooned to P17.56 trillion as of the end-October due to weaker peso, exceeding its projected P17.36-trillion ceiling by yearend. — Aubrey Rose A. Inosante