DEBT servicing made by the government increased by 42.7 percent during the first half of 2015 from debt servicing figures registered at the end of the first half last year.
The increase in the debt servicing was due to the more than doubling of amortization on the government’s principal debt made during the first half of this year, as compared to amortization made during the same period last year.
Total debt servicing made by the government from January to June 2015 amounted to P324.81 billion, up from the P227.51 billion in made during the same period last year. Out of the total, P168.69 billion, or 52 percent, was used for amortizing the principal debt. The rest of the amount was used as interest payments, which amounted to P156.12 in the first half. This was slightly lower than interest payments made during the first half of 2014 which amounted to P159.74 billion.
Aside from the big increase in the amortization, the interest payments constituted a lesser part of the total expenditures for the first half which further indicates the government’s increased capability to settle its debts. Total expenditures for the first half of 2015 amounted to P1.072 trillion. Of this amount, interest payments accounted for P156.12 billion, or only 14.6 percent.
This ratio of interest payments in relation to total expenditures dipped by 150 basis points from the ratio registered in the first half of 2014 which was 16.1 percent.
The decline in the ratio of interest payments in relation to the total expenditures indicate that more cash was freed for projects that have social or economic impact, instead of merely using the cash to pay off interest on the government’s debts.