Debt payments by the national government dropped 42.22 percent in the first five months of 2025 from a year earlier, due largely to lower amortization, the Bureau of the Treasury (BTr) said.
Data posted on the BTr website on Sunday showed debt payments from January to May this year stood at P702.968 billion, compared with P1.217 trillion in the same period last year.
Amortization fell by a steep 61.39 percent to P345.567 billion from P895.126 billion.
On the other hand, BTr data showed interest payments rose 11.14 percent to P357.401 billion from P321.585 billion.
In May alone, government debt payments increased by 16.04 percent to P80.047 billion from P68.98 billion in the same month last year. This was due to a 28.04 percent rise in amortization to P10.093 billion from P7.883 billion.
Interest payments grew by 14.5 percent to P69.954 billion from P61.097 billion.
John Paolo Rivera, a senior research fellow at the Philippine Institute for Development Studies, said the sharp drop in the five-month debt service, driven by the decline in amortization, likely reflects the government’s front-loaded repayments in the previous year and a more strategic scheduling of maturities this year.
“This allowed for temporary breathing room in principal payments during the early months,” Rivera said.
However, Rivera said the rise in interest payments signals elevated borrowing costs, likely due to the higher interest rate environment in both domestic and global markets.
“It also reflects the government’s current debt composition, which has a sizable portion of fixed-rate and medium- to long-term instruments affected by past issuances at higher yields,” Rivera said.
“The 16 percent increase in May debt service may be a timing-related spike rather than a structural shift, but it bears watching. If interest rates remain elevated and more bonds mature in the second half, we could see a pick-up in amortization and servicing,” he said.
Rivera said careful cash flow and debt management would be key to keeping overall fiscal performance on track.
Reinielle Matt Erece, an economist at Oikonomia Advisory & Research Inc., said one of the possible factors that may have driven this decline in debt payments was the peso’s appreciation seen over the past months.
“This caused reduced foreign payments as debt servicing became slightly cheaper,” Erece said.
Michael Ricafort, Rizal Commercial Banking Corp. chief economist, said the decline in government debt service may be due to a lower amount of matured debts and government securities compared with a year earlier.
“The total decline in local policy rates of -1.25 since August 2024 and the stronger peso versus the US dollar in recent months, among nine-month lows, would be offsetting positive factors that would somewhat partly reduce the national government’s debt servicing costs for the coming months,” Ricafort said.
Earlier, the same downtrend in the government’s debt payments was observed in the January-April period, which recorded a sharp 45.7 percent drop.
The BTr data showed that debt payments for the period amounted to P622.92 billion, down from P1,147.73 billion in the same four-month period last year.
The BTr emphasized that amortization during the period declined by 62.19 percent to P335.47 billion from P887.24 billion in the same period last year.
