Debt payments down in April

THE GOVERNMENT’S debt payments declined by nearly 50% in April as it settled less in interest and principal for its liabilities, data from the Bureau of the Treasury showed.

The state spent P16.083 billion to service its interest and principal payments to its creditors in April, 46.81% less than the P30.238 billion disbursed in the same month last year.

Interest payments accounted for the bulk of the month’s total at P13.398 billion. This amount was 43.42% less than the P23.681 billion in interest settled in April 2013.

Of this total, the government made P10.655 billion in interest payments to its domestic creditors, down by 37.02% from the P16.919 billion paid a year ago.

Broken down further, of the interest payments made to domestic creditors in April, P5.841 billon went to holders of fixed-rate Treasury bonds. Holders of retail Treasury bonds were paid P4.596 billion while Treasury bills holders accounted for P196 million.

The remaining P2.743 billion in interest paid in April, meanwhile, went to foreign lenders. This was also down from the P6.762 billion spent in the same month in 2013.

On the other hand, principal payments in the month dropped to P2.685 billion from last year’s P6.557 billion.

Majority of this went to the state’s external creditors at P2.413 billion, less than the P2.875 billion paid in April 2013. Some P272 million, meanwhile, went to local lenders, down sharply from the P3.682 billion recorded a year ago.

For the first four months of the year, debt payments totaled P174.194 billion, 31.83% less than the P255.56 billion spent in January to April 2013.

Interest payments during the period amounted to P116.527 billion, less than the P122.017 billion recorded the year previous. Of this, P75.082 billion was paid to local lenders and the remaining P41.445 billion, to external lenders.

Meanwhile, principal payments made from January to April totaled P57.667 billion, also less than the P133.543 billion recorded a year ago. Payments to foreign lenders made up bulk of this total at P56.683 billion, and the remaining P984 million went to local creditors.

A significant portion of the national budget goes to interest payments on debt, while principal payments are off-budget items covered by debt refinancing.

The government is programmed to spend P793.583 billion to service its debts this year, with P440.931 billion of this total going to principal payments and P352.652 billion to interest payments, according to the national budget.

In 2013, debt payments dropped by over a fifth to P559.017 billion from P729.774 billion the previous year, staying well below the P767.394 billion programmed for debt service last year.

The national government’s outstanding debt grew by 6.2% year-on-year to P5.64 trillion at end-April from the P5.308 trillion recorded as of the same month in 2013. -- Bettina Faye V. Roc

source:  Businessworld