NG debt payments surge in July

HIGHER INTEREST and amortization payments drove the National Government’s (NG) debt service bill up by nearly 30% in July, data from the Bureau of the Treasury showed.

The latest Treasury data showed payments for the government’s debt obligations rose by 29.56% to P139.99 billion in July from P108.06 billion in the same month a year earlier.

Month on month, debt service surged by 81.29% from P77.22 billion in June, driven largely by higher interest payments.

Debt service covers the NG’s interest and principal payments on domestic and foreign debt.

Interest payments accounted for 97.99% of the debt service bill in July, while the remainder went to principal amortization.

The government’s interest payments went up by 29.14% to P137.18 billion in July from P106.22 billion in the same month a year earlier.

Interest payments on domestic debt stood at P98.85 billion in July, rising by 19.21% from P82.92 billion in the same month in 2025.

Broken down, P88.49 billion went to interest payments for fixed-rate Treasury bonds, P4.91 billion for Treasury bills, P3.56 billion for retail Treasury bonds, and P1.89 billion for other domestic borrowings.

On the other hand, interest payments for foreign borrowings soared by 64.48% to P38.33 billion in July from P23.3 billion a year ago.

Meanwhile, NG’s repayment of its loan principal surged by 53.38% to P2.82 billion in July from P1.84 billion a year ago.

This consisted of P135 million in amortization of domestic obligations, which declined by 24.16% from P178 million a year earlier, and P2.68 billion for foreign obligations, which jumped by 61.7% from P1.66 billion.

SEVEN-MONTH BILL
For the first seven months, the government’s debt service bill surged by 55.98% to P1.37 trillion from P876.16 billion in the same period last year.

In the January-to-July period, the NG’s repayment of its loan principal accounted for more than half or 54.57% of the total debt service bill.

Amortization payments in the January-to-July period more than doubled to P745.82 billion from P355.12 billion a year earlier.

Broken down, principal payments for domestic debt soared by 269.82% to P631.04 billion, while payments for external borrowings declined by 37.79% to P114.78 billion.

Interest payments, meanwhile, stood at P620.87 billion in the seven months ending July, up by 19.16% from P521.04 billion in the same period a year earlier.

Interest payments on domestic debt jumped by 20.07% year on year to P459.57 billion in the first seven months from P382.74 billion a year ago.

This consisted of P330.65 billion for fixed-rate Treasury bonds, P91.06 billion for retail Treasury bonds, P30.06 billion for Treasury bills, and P7.8 billion in interest payments for other domestic borrowings.

Interest payments on foreign obligations increased by 16.63% year on year to P161.3 billion in the January-to-July period from P138.3 billion a year ago.

“The sharp increase in debt service payments reflects the combined impact of a larger debt stock, higher interest costs, and the scheduled repayment of maturing obligations,” said Union Bank of the Philippines Chief Economist Ruben Carlo O. Asuncion in a Viber message.

“The weaker peso has likewise raised the cost of servicing foreign currency-denominated debt,” he added.

The peso closed at P61.24 against the dollar on July 31, strengthening by 12 centavos from its P61.36 close on June 30. However, it was weaker by P2.45 than its P58.79 close on Dec. 29, 2025.

“Looking ahead, debt service is likely to remain elevated as the government continues to fund its fiscal requirements, making revenue performance, borrowing conditions, interest rates, and exchange rate stability key factors to watch,” Mr. Asuncion said.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the higher debt service bill reflected a wider deficit and increased borrowings.

The NG’s budget deficit widened by 461.73% to P106.3 billion in July from P18.9 billion in the same month a year ago.

As of end-July, NG’s outstanding debt increased by 1.7% to P19.39 trillion from P19.07 trillion at end-June.

For the coming months, he said the government’s catch-up infrastructure spending and still-elevated inflation “could lead to higher debt servicing costs, both in principal and interest payments.”

Reyes Tacandong & Co. Senior Adviser Jonathan L. Ravelas said the higher debt payments reflected a combination of principal repayments coming due, higher interest costs from past borrowings, and the impact of exchange rate movements.

“What’s important to note is that debt service tends to be lumpy, so a few large maturities can significantly boost the monthly and year-to-date numbers. It does not necessarily signal debt stress, but rather reflects the government’s repayment schedule,” he said in a Viber message.

For the rest of the year, Mr. Ravelas said investors should watch out for the pace of government borrowings, the direction of interest rates, and peso movements.

“The good news is that the Philippines still maintains manageable debt metrics and strong market access,” he said. “The key challenge is ensuring that economic growth continues to outpace the growth of debt, allowing fiscal consolidation to proceed without compromising development spending.” — Justine Irish D. Tabile