THE NATIONAL Government’s (NG) debt service bill plunged in March amid a decline in amortization payments, the Bureau of the Treasury (BTr) said.

The latest data from the Treasury showed that payments made by the government for its obligations went down by 65.63% to P183.36 billion in March from P533.52 billion in the same month a year ago.

Month on month, however, debt service surged by 251.57% from the P52.15 billion in February.

Debt service refers to payments made by the NG for its domestic and foreign debt.

More than half or 51.94% of the March debt service bill was made up of amortization payments.

The government’s repayment of its loan principal or amortization declined by 79.41% to P95.24 billion in March from P462.58 billion a year ago.

This came as amortization on domestic debt plunged to just P138 million from P455.91 billion in the same month last year.

Meanwhile, principal payments for external obligations surged to P95.1 billion in March from P6.67 billion a year prior.

On the other hand, the National Government’s interest payments rose by 24.21% to P88.12 billion in March from P70.94 billion in the same month a year earlier.

Interest payments for domestic debt stood at P64.21 billion, up by 15.27% from P55.71 billion in March 2024.

Of this total, P40.42 billion went to interest payments for fixed-rate Treasury bonds, P19.18 billion for retail Treasury bonds, and P4.58 billion for Treasury bills.

Meanwhile, interest payments for foreign borrowings climbed by 56.91% to P23.91 billion in March from P15.24 billion a year prior.

For the first quarter, the government’s debt service bill went down by 65.31% to P342.02 billion from P986.04 billion in the same period last year.

Amortization payments in the period plunged by 87.26% to P101.02 billion from P793.04 billion in the first quarter of 2024.

Broken down, principal payments for domestic debt slumped to P576 million from P699.67 billion, while those for external borrowings climbed to P100.45 billion from P93.371 billion.

Meanwhile, interest payments stood at P241.001 billion in the three months ended March, up 24.88% from P192.99 billion in the same period a year ago to make up the bulk of the government’s total debt service bill in the first quarter.

Interest payments on domestic debt jumped by 28.54% year on year to P178.56 billion in the period. This consisted of P124.83 billion for fixed-rate Treasury bonds, P39.63 billion for retail Treasury bonds, P12.24 billion for Treasury bills, and P1.86 billion in interest payments for other domestic borrowings.

Interest payments for foreign obligations likewise rose by 15.38% year on year to P62.44 billion in the first quarter.

Debt service declined in March as less government securities matured that month versus the year-ago level, resulting in less principal payments, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

The drop was also supported by a stronger peso as this reduced the peso equivalent of principal and interest payments for foreign debt, Mr. Ricafort said, adding that cuts in benchmark interest rates also helped bring down debt servicing costs.

The Bangko Sentral ng Pilipinas last year cut benchmark rates by 75 basis points (bps) before pausing in February amid uncertainties caused by the Trump administration’s evolving policies. It resumed its easing cycle in April, reducing borrowing costs by 25 bps to bring the policy rate to 5.5%.

“For the coming months, larger NG Treasury bond maturities of around P140 billion in early April 2025 and around total of around P800 billion from August-September 2025 could fundamentally lead to higher NG debt payments,” Mr. Ricafort said.

The NG’s debt stock rose to a fresh high of P16.68 trillion as of end-March, latest BTr data showed. This was equivalent to 62% of gross domestic product, the highest ratio in 20 years. — Aubrey Rose A. Inosante