NG debt service bill falls to P169 billion in March

THE NATIONAL Government’s (NG) debt service bill declined in March amid lower amortization payments, the Bureau of the Treasury (BTr) said.

The latest Treasury data showed payments made by the government for its obligations went down by 7.78% to P169.09 billion in March from P183.36 billion in the same month a year ago.

Month on month, debt service plunged by 60.74% from the P430.64 billion in February.

Debt service refers to the government’s payments on its domestic and foreign debt obligations.

Interest payments accounted for more than half or 57% of the March debt service bill.

The NG’s interest payments rose by 9.38% to P96.38 billion in March from P88.12 billion in the same month a year earlier.

Interest payments on domestic debt stood at P79.71 billion, 24.14% higher than P64.21 billion in March 2025.

Of this total, P47.04 billion went to interest payments for fixed-rate Treasury bonds, P28.23 billion for retail Treasury bonds, and P4.41 billion for Treasury bills.

Meanwhile, interest payments on foreign borrowings declined by 30.26% to P16.68 billion in March from P23.91 billion a year prior.

On one hand, the government’s repayment of its loan principal or amortization stood at P72.71 billion in March, declining by 23.66% from P95.24 billion a year ago.

This came as amortization on external debt dropped by 23.68% to P72.58 billion in March from P95.1 billion in the same month last year.

Meanwhile, principal payments for domestic obligations declined by 7.25% to P128 million in March from P138 million a year prior.

Q1 DEBT SERVICE BILL
For the first quarter, the government’s debt service bill surged by 115.6% to P737.41 billion from P342.02 billion in the same period last year.

Amortization payments in the period jumped by 359.58% to P464.27 billion from P101.02 billion in the first quarter of 2025.

Broken down, principal payments for domestic debt surged to P386.74 billion from P576 million, while those for external borrowings declined to P77.54 billion from P100.45 billion.

Meanwhile, interest payments stood at P273.13 billion in the three-month period, up 13.3% from P241 billion in the same period a year ago.

Interest payments on domestic debt jumped by 18.38% year on year to P211.39 billion in the first quarter from P178.56 billion a year prior.

This consisted of P152.22 billion in interest payments on fixed-rate Treasury bonds, P43.76 billion for retail Treasury bonds, P12.72 billion for Treasury bills, and P2.69 billion in interest payments for other domestic borrowings.

Interest payments on foreign obligations dipped by 1.11% year on year to P61.74 billion in the first quarter from P62.44 billion a year ago.

Ser Percival K. Peña-Reyes, a senior research fellow at the Ateneo Center for Economic Research and Development, said debt service payments will likely remain elevated for the rest of the year.

“The pace may vary by quarter, depending on maturity schedules and interest rate movements (but) several indicators point in that direction,” he said, citing rising outstanding debt, frontloaded borrowing, high interest costs and a weaker peso.

The Bangko Sentral ng Pilipinas delivered a 25-basis-point (bp) rate hike last month, bringing the policy rate to 4.5%.

“If global and domestic interest rates continue easing later in 2026, the increase in interest expenses could moderate,” Mr. Peña-Reyes said.

“However, because the debt base itself is now much larger, overall debt service obligations are still expected to stay historically high for the remainder of the year,” he added.

The NG’s debt stock rose to a fresh high of P18.49 trillion as of end-March, the latest BTr data showed. This was equivalent to 65.2% of gross domestic product, the highest ratio in 21 years.

Meanwhile, the peso has been trading above P60 for over two weeks. It closed at P60.613 a dollar on Friday, declining by 19.3 centavos from its P60.42 finish on Thursday. It hit a record low of P61.567 on April 29.

“With growth slowing and interest rates still high, debt servicing is getting more expensive, and that’s where the real risk lies,” said Jonathan L. Ravelas, a senior adviser at Reyes Tacandong & Co., in a Viber message.

“Credibility matters: tighter fiscal discipline, faster execution, and growth-enhancing spending. The ceiling may be intact, but markets will be watching whether policy keeps debt manageable in practice, not just on paper,” he added. — Justine Irish D. Tabile