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Gov’t debt payments rise to P239B in Q1

By Ruben Hortelano

05/06/2008

Debt service as of the end of last March reached P239.36 billion, P4.42 billion higher than the programmed P234.94 billion for the first quarter.

Debt service includes the payment on interest and principal the country’s estimated P1.3-trillion debts.

Data from the Department of Finance (DoF) shows that bulk of the payments was made for principal payments amounting to P139.12 billion, P6.52 billion higher than the P132.59 billion scheduled for the period.

Favorable interest rates and a stronger peso allowed the central government to make more principal payments on its debts and save billions of pesos more on interest payments, according to Finance Secretary Margarito Teves.

Principal payments paid to domestic fund sources amounted to P126.15 billion or P6.2 billion higher than the P120 billion scheduled for the first three months of the year.

Principal payments made to foreign loan sources reached around P13 billion from the programmed P12.65 billion or P323 million lower than the target.

Interest payments, on the other hand, amounted to P100.24 billion, P2.11 billion lower than the programmed P102.35 billion.

Payments of interest to domestic fund sources amounted to P57.36 billion or P2.33 billion lower than the target.

Amount paid to foreign creditors amounted to P42.89 billion or P223 million higher then the P42.66 billion programmed for the period.

Last year’s debt payment by the national government totaled P514.1 billion, higher than the P507.22 billion programmed for the period.

Of the total actual payment, P352.71 billion was paid to domestic fund sources, lower than the programmed P430.87 billion while P261.36 was paid to creditors abroad, way higher than the P176.35 billion target.

The government was able to surpass its programmed debt service due to strong peso, which rose by more than 18 percent last year, and lower interest rates.

This year, the local unit has depreciated by around 1.81 percent against the greenback as investors continue to shy away from emerging markets like the Philippines due to the US-led global slowdown.

However, the local unit’s volatility among the country’s neighboring economies remains low at about 1.24 percent since the start of the year to April 25, 2008.