GOVERNMENT’S debt payments in the first quarter of the year plunged by nearly 40 percent to P313.65 billion, official data showed. This, even as the outgoing administration has vowed that a fiscal consolidation plan —crucial amid higher debt and deficit levels in the Covid-19 pandemic—will be ready in time for a briefing with the new economic team.
Latest data from the Bureau of the Treasury showed that the government’s debt service bill from January to March dropped by 39.9 percent from P521.51 billion in the same period last year.
While interest payments increased, amortization expenses plummeted by 58.5 percent year-on-year to P164.32 billion from P395.65 billion.
Interest payments rose by 18.65 percent to P149.33 billion in the first three months of the year from P125.86 billion in the comparable period in 2021.
For March alone, the government’s debt service bill dived by 74.9 percent year-on-year to only P67.39 billion from P268.41 billion.
Amortization expenses crashed by 94.6 percent to P11.84 billion from P220.75 billion in the same month last year. On the other hand, interest payments posted a double-digit growth of 16.5 percent to P55.55 billion in March this year from last year’s P47.67 billion.
For this year, the government programmed debt payments to reach P1.298 trillion.
If this is realized, this would be higher than the P1.204 trillion that the government shelled out in 2021 to repay its debts as the Covid-19 pandemic raged on.
To recall, the national government’s outstanding debt as of end-March has already hit a new record-high at P12.68 trillion. This was higher by P586.29 billion or 4.8 percent from P12.09 trillion as of end-February this year. By the end of this year, the government expects the country’s outstanding debt to further balloon to P13.42 trillion.
‘Critical’ time
Finance Secretary Carlos G. Dominguez III earlier said this year would be a “critical” time for the country as it needed to outgrow its debt by stimulating robust economic growth.
The finance chief has since said the next president should prioritize outgrowing the country’s debt at the soonest possible time to bring down the share of debt to the country’s economy or debt-to-gross domestic product (GDP) ratio, which has already spiked to a 17-year high at 63.5 percent in the first quarter of the year.
This is also above the internationally recommended 60-percent threshold by multilateral lenders for emerging markets like the Philippines and also the highest since the country’s debt-to-GDP ratio hit 65.7 percent in 2005 under the Arroyo administration, based on Treasury data.
To help the next administration bring down the debt and deficit levels that have risen amid the Covid-19 pandemic, Dominguez said late Thursday that the fiscal consolidation plan will be ready in time for their briefing with the economic team.
Dominguez added the next administration can bring down the debt-to-GDP ratio through a “well thought out, closely coordinated, and efficiently executed economic program that protects the most vulnerable from worldwide inflationary pressures through targeted subsidies, fosters sustainable and inclusive economic growth, and maintains a healthy fiscal regime by increasing revenues and eliminating wasteful expenditures.”