DEBT payments by the national government fell by a steep 65.31 percent in the first quarter from a year earlier, due largely to lower amortization, the Bureau of the Treasury (BTr) reported.
Data posted on the BTr website as of Sunday showed debt payments in the first three months of 2025 stood at P342.023 billion, compared with P986.036 billion in January to March 2024.
Amortization dropped 87.26 percent to P101.022 billion from P793.044 billion in the comparable period.
On the other hand, BTr data showed interest payments totaled P241.001 billion, up 24.88 percent from P192.992 billion.
A similar trend was seen in March alone, as government debt payments declined by 65.63 percent to P183.359 billion, from P533.523 billion paid out in the same month last year.
Amortization slid 79.41 percent to P95.238 billion from P462.579 billion.
Interest payments increased 24.21 percent to P88.121 billion from P70.944 billion.
A ‘timing’ issue
John Paolo Rivera, a senior research fellow a the Philippine Institute for Development Studies (PIDS), said the decline in total debt payments was largely driven by the drop in amortization and appears to be a timing issue rather than a structural shift.
“It is likely that larger principal repayments are scheduled for later quarters, especially given the typical debt maturity profiles and the government’s rolling borrowing strategy,” he said.
“So, we may see a reversal in this trend later in the year as those obligations come due,” Rivera added.
“The increase in interest payments, on the other hand, reflects the reality of higher domestic and global interest rates in recent years,” the PIDS senior researcher said.
“If this continues, it could pressure the budget, especially if revenue growth does not keep pace,” he added.
While the current level is still manageable, prolonged high interest servicing paired with suppressed amortization may raise questions about future debt sustainability, especially if new borrowing increases to cover fiscal gaps, Rivera stressed.
Reinielle Matt Erece, economist at Oikonomia Advisory & Research Inc., said a lot of short-term bonds were issued the past few months which will contribute to rising debt obligations by the national government.
“Foreign exchange risk is also another factor to monitor regarding debt repayments for foreign loans,” he said.
“Recently, the elevated value of the peso helps with reducing the obligations the national government has to repay, However, if the situation reverses especially as the Fed remains with their tight monetary policy regime while the BSP looks to ease, foreign repayments may increase as the dollar becomes more expensive in peso terms,” Erece said.
Debt management strategy
“Taking on more domestic debt over foreign debt may be a strategy to better manage the national government’s debt and shield itself from foreign exchange risks,” he added.
Michael Ricafort, Rizal Commercial Banking Corp. chief economist, said: “the year-on-year decline in national government debt payments, despite the third widest budget deficit in March 2025 on a monthly basis, could be largely attributed to a lower amount of matured government debt, compared with year-ago levels.”
“(This is) also supported partly by the stronger peso exchange rate vs the US dollar, which also reduced the peso equivalent of foreign debt payments,” Ricafort said.
“For the coming months, larger national government Treasury bond maturities could fundamentally lead to higher national government debt payments,” he added.
