Debt service declines in February

The national government’s (NG) debt service slumped year on year in February as amortization payments declined, the Bureau of the Treasury (BTr) said.

Latest data from the BTr showed payments made by the NG for its debt plunged by 82.24% to PHP 52.15 billion in February from PHP 293.62 billion in the same month last year.

Month on month, debt service slid by 51.03% from PHP 106.51 billion in January.

Debt service refers to payments made by the NG on its domestic and foreign debt.

In February, interest payments accounted for the bulk or 92.89% of total debt service, while the rest went to amortization.

The government’s repayment of its loan principal or amortization declined by 98.49% to PHP 3.71 billion in February from PHP 245.79 billion a year ago.

This was mainly due to the 99.95% drop in amortization on domestic debt to PHP 121 million in February from PHP 243.63 billion in the same month in 2024.

External principal payments, on the other hand, increased by 65.88% to PHP 3.59 billion in February from PHP 2.16 billion in the same month last year.

On the other hand, interest payments inched up by 1.29% to PHP 48.45 billion in February from PHP 47.83 billion in the same month a year earlier.

Domestic interest payments fell by 22% to PHP 42.07 billion in February from PHP 34.35 billion a year ago. Broken down, PHP 20.74 billion went to interest payments for fixed-rate Treasury bonds, PHP 16.87 billion for retail Treasury bonds, and PHP 4.42 billion for Treasury bills.

Interest payments on external debt went down by 52.67% to PHP 6.38 billion in February from PHP 13.48 billion a year ago.

For the first two months of 2025, the government’s debt service declined by 64.94% to PHP 158.66 billion from PHP 452.51 billion in the same period last year.

Amortization payments for the January-to-February period plunged by 98.25% to PHP 5.78 billion from PHP 330.47 billion a year ago.

Principal payments on domestic debt slumped by 99.82% to PHP 438 million, while those for external debt declined by 93.83% to PHP 5.35 billion.

On the other hand, interest payments rose by 25.26% to PHP 152.88 billion as of end-February from PHP 122.05 billion in the same period a year ago.

Interest payments accounted for 96.35% of the total debt repayments in the first two months of 2025.

Interest payments on domestic debt jumped by 37.49% to PHP 114.35 billion, while external debt payments dipped 0.9% to PHP 38.53 billion.

“The debt service bill for February declined mainly due to lower obligations on Treasury bonds for the month,” Oikonomia Advisory and Research Inc. economist Reinielle Matt M. Erece said.

“One of the other factors that also contributed to the lower bill would be the peso appreciation experienced since February, which meant lower foreign payments.”

The peso closed at P57.995 against the greenback at end-February, appreciating by 37 centavos from its P58.365-per-dollar finish at end-January.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said there was a lower amount of maturing debt in February compared with a year ago.

Mr. Ricafort noted that lower interest rates also mitigated the rise in interest payments.

“Further cuts in Fed rates that could be matched locally could also help temper the increase in interest payments if there would be additional/new borrowings,” he added.

Mr. Ricafort noted the maturing government securities in April 2025 and from August-September 2025 “could lead to more borrowings to somewhat pay off or borrow again to replace the maturing debt.”

In the near term, Mr. Erece expects the debt service bill to stabilize.

“However, I expect higher debt servicing obligations in the long term as a result of higher borrowings this year,” he added.

The NG’s debt stock rose to a fresh high of P16.63 trillion as of end-February but the BTr said this level “remains manageable.” — Aubrey Rose A. Inosante