A SHARP decline in principal repayments eased the government’s debt service burden in September, more than offsetting higher interest expenses, the Bureau of the Treasury said.
The government spent P207.5 billion to service its debt during the month, down 36.7 percent from a year earlier, the latest Treasury data showed.
In the first nine months of the year, the state paid P1.7 trillion in debt service, nearly 12 percent less than in the same period in 2025. The amount represented 85 percent of the Marcos administration’s debt service plan for 2026.
The decline was driven largely by lower amortization costs, or payments toward the principal of outstanding loans. These fell by more than half to P122 billion in September, bringing the nine-month total to P878 billion, down 27 percent.
The government repaid nearly P110 billion in principal to domestic creditors during the month, a 54 percent decline from a year earlier. From January to September, principal repayments to local lenders totaled P741 billion, down 26 percent.
Payments to foreign creditors, meanwhile, rose 44 percent to P12 billion in September. However, amortization to overseas lenders still fell 30 percent to P137 billion in the first nine months.
Interest expenses continue to climb
The decline in principal repayments more than offset the rise in borrowing costs, keeping the government’s overall debt service expenses lower in September.
Interest payments rose 5 percent year on year to P86 billion during the month. For January to September, these expenses climbed 16 percent to P772 billion.
Domestic creditors received P69 billion in interest payments in September, up 6 percent from a year earlier. This brought the government’s cumulative interest expenses on local debt to P585 billion, up 18 percent.
Interest payments on foreign borrowings, meanwhile, were nearly unchanged at P16.5 billion during the month.
Still, the government had paid P187 billion in interest to foreign creditors since January, up 9 percent from the same period last year.
For the full year, the government programmed P995.6 billion for interest payments and P1.049 trillion for principal repayments, making debt service the Philippines’ single biggest expense item in 2026 and every year prior.
The government’s outstanding debt climbed to a record P19.66 trillion in September, driven by additional borrowing and the peso’s depreciation. The amount is now within striking distance of the Marcos administration’s projected P19.77-trillion debt by the end of 2026. Since the start of the year, the government’s debt stock has expanded by 11.03 percent, or nearly P2 trillion. (Ian Nicolas P. Cigaral © Philippine Daily Inquirer)
