Drop in interest payments adds to govt underspending
Debt servicing by the national government posted a double-digit decline in August from a year earlier on the back of lower interest payments and amortizations, data from the Bureau of the Treasury showed.
Although total debt payment is not accounted in the government’s cash operations report, an analyst said a similarly large drop with respect to the interest payments item underscored the fact that the state was not spending as much as targeted.
Debt payments for the month amounted to P24.638 million, 21 percent lower than the P31.199 billion recorded a year earlier. Compared to July, debt servicing in August dropped by almost 63 percent from P66.570 billion.
Government interest payments declined by 20 percent to P16.457 billion from last year’s level. Of the amount, domestic lenders received P15.959 billion while P498 million was used to service foreign debts.
Based on the cash operations report of the Department of Finance, interest payments in August fell short by 37 percent from the programmed P26.284 billion.
Lower interest payments and operating expenses resulted to government underspending in August. With P161.616 billion in total expenditures, public spending fell 11 percent short of the P182.022 programmed for the month.
This resulted in a budget surplus of P15.040 billion.
“Debt servicing is not included in the monthly national government cash operations reports. But the related interest expense would be and that’s why we see slow growth in that [government spending],” University of Asia and the Pacific economist Victor Abola said.
The government’s amortization expenses reached P8.181 billion in August, lower by 23 percent year-on-year.
Of the total, domestic payments fell 33 percent to P4.450 billion. Foreign amortizations stood at P3.731 billion or 6 percent lower than the yearago figure.
Year to date, debt payments were up 10 percent to P418.134 billion from P380.505 billion.
Earlier, the BTr reported that government’s outstanding debt rose 3.2 percent to P5.897 trillion as of August from P5.713 trillion in the same period last year.
Domestic borrowings climbed to P3.856 trillion, or 2.1 percent from P3.777 trillion a year ago, while loans from foreign investors rose to P2.041 trillion from P1.935 trillion.
National government-guaranteed obligations during the month fell 9.7 percent to P412.905 billion.