National Government’s debt service bill rises in May

By Justine Irish D. Tabile, Senior Reporter

THE NATIONAL GOVERNMENT’S (NG) debt service bill jumped by over 21% in May amid higher interest and amortization payments, the Bureau of the Treasury (BTr) said.

The latest Treasury data showed payments made by the government for its obligations surged by 21.4% to P97.18 billion in May from P80.05 billion in the same month a year ago.

Month on month, however, debt service slumped by 69.1% from P314.89 billion in April.

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

The bulk or 87% of debt payments in May consisted of interest payments, while the rest were amortization payments.

The government’s interest payments rose by 20.9% to P84.6 billion in May from P69.95 billion in the same month a year earlier.

Interest payments for domestic debt stood at P66.51 billion in May, up by 27.1% from P52.31 billion in the same month in 2025.

Of this total, P41.68 billion went to interest payments for fixed-rate Treasury bonds, P21.09 for retail Treasury bonds, and P3.74 billion for Treasury bills.

Meanwhile, interest payments for foreign borrowings inched up by 2.5% to P18.09 billion in May from P17.64 billion a year prior.

On the other hand, NG’s repayment of its loan principal increased by 24.6% to P12.58 billion in May from P10.09 billion a year ago.

These only consisted of amortization on foreign obligations as it did not make principal payments on domestic debt in May this year and last year.

FIVE-MONTH BILL
For the first five months, the government’s debt service bill surged by 63.5% to P1.15 trillion from P702.97 billion in the same period last year.

Amortization payments in the January-to-May period jumped by 110.7% to P728.21 billion from P345.57 billion a year ago.

Broken down, principal payments for domestic debt soared by 269.9% to P630.37 billion, while payments for external borrowings declined by 44.1% to P97.85 billion.

Meanwhile, interest payments stood at P421.26 billion in the five months ending May, up 17.9% from P357.4 billion in the same period a year ago.

Interest payments on domestic debt jumped by 22.7% year on year to P320.8 billion in the first five months from P261.34 billion a year ago.

This consisted of P227-billion fixed-rate Treasury bonds, P68.41 billion for retail Treasury bonds, P20.83 billion for Treasury bills, and P4.55 billion in interest payments for other domestic borrowings.

Interest payments on foreign obligations increased by 4.6% year on year to P100.46 billion in the January-to-May period from P96.06 billion a year ago.

“The increase in debt service in May and during the first five months of the year likely reflects a combination of higher principal repayments and larger interest payments as the government continues to service a growing debt stock,” Union Bank of the Philippines Chief Economist Ruben Carlo O. Asuncion told BusinessWorld via Viber.

“The repayment schedule of maturing obligations can also create significant swings in monthly debt service figures, particularly when large domestic or external debt maturities fall within a given period,” he added.

In the coming months, Mr. Asuncion said debt service could remain elevated due to the government’s ongoing financing requirements and the rollover of maturing debt.

“Interest payments may also stay relatively high as portions of the debt stock continue to reflect the higher interest rate environment seen in recent years,” he said.

He added that foreign exchange rate movements could affect servicing costs for foreign currency-denominated obligations.

On Friday, the peso closed at P61.415 against the greenback, strengthening by 15 centavos from its P61.565 finish on Thursday.

University of Asia and the Pacific economist Marco Antonio C. Agonia attributed the increase in debt servicing to a larger debt stock and elevated interest payments.

“Borrowing for the government’s normal operations and its response to higher oil prices mechanically increased principal repayment,” Mr. Agonia told BusinessWorld via e-mail.

“Meanwhile, elevated interest rates from larger risk premia arising from the flood control scandal and the oil price crisis materially pushed up interest payments thus far,” he added.

The NG’s outstanding debt stood at P18.55 trillion as of end-May, inching up by 0.41% from the prior month’s level of P18.47 trillion.

Year on year, outstanding debt went up by 9.62% from P16.92 trillion at end-May 2025.