PH Government Debt Payments Decline In October

Data from the Bureau of the Treasury showed that debt payments of the national government dropped by more than half in October due to lower amortization.

The current administration’s debt servicing went down by 55% compared to last year, reaching ₱39.82 billion in October.

Debt servicing refers to payments of both interest and principal. The debt service burden excludes actual outflows such as rescheduling or refinancing of existing debt and conversion of debt to equity.

In October, debt payments reached ₱929.66 billion, down by 11% compared to ₱1.052 trillion debt a year ago.

Within that amount, interest and principal payment reached ₱433.16 billion and ₱492.5 billion, respectively.

Moreover, The Department of Finance said it aims to gradually decrease the country’s debt ratio to 51% by the end of the Marcos administration.

For 2022, the debt to gross domestic product (GDP) ratio is predicted to drop to 61.8%   by next year.

The debt ratio in 2024 is expected to hit 60.6% and will hit the internationally accepted threshold of 59.3% by 2025.

In 2026, the ratio should settle down at 57.7% and ultimately, at 52.5% by 2027.

“In other words, by the end of the Marcos years, we expect that national debt to GDP ratio to be below 60%,” Finance Secretary Benjamin E. Diokno said.

Diokno reassures that the debt level being above 50% is not damaging, explaining the current global debt-to-GDP ratio ranges between 200% to 300%.

“This kind of debt structure has nothing to worry about. This is one of the lowest among even emerging economies,” Diokno said. “Skies are not falling because our GDP ratio is at 62%.”

As of May 2022, the national government’s debt stock is at ₱12.495 trillion.

Source: Manila Bulletin