Debt service bill jumps in January

By Justine Irish D. Tabile, Senior Reporter

THE NATIONAL Government’s (NG) debt service bill jumped by nearly 30% to P137.67 billion in January amid higher interest payments, the Bureau of the Treasury (BTr) said.

The latest data from the Treasury showed that the debt service bill increased by 29.3% in January from P106.51 billion in the same month last year.

Month on month, the debt service bill surged by 75% from P78.64 billion in December.

Debt service refers to the payments made by the government on domestic and foreign borrowings.

Ateneo Center for Economic Research and Development Director Ser Percival K. Peña-Reyes told BusinessWorld that the higher debt service bill in January is due to “more expensive debt amid higher interest rates, larger total debt stock, and frontloading of repayments early in the year.”

“These factors combined pushed total debt servicing higher even if some components (like principal) did not increase dramatically,” he said in a Viber message.

The bulk, or 92.8% of debt payments, was made up of interest payments, the BTr data showed.

In January, interest payments went up by 22.4% to P127.82 billion from P104.44 billion in the same month a year ago.

Domestic interest payments also increased by 30.9% to P94.6 billion in January from P72.29 billion in the same month last year.

Broken down, P85.4 billion went to fixed-rate Treasury bonds, P3.68 billion to Treasury bills, P3.58 billion to retail Treasury bonds, and P1.95 billion to others.

Interest payments for foreign borrowings inched up by 3.3% to P33.2 billion in January from P32.15 billion in the same month in 2025.

As interest rates remain elevated, Mr. Peña-Reyes said interest payments will continue to make up the bulk of the debt service bill in the near term.

“What we are seeing is most likely a mix of structural pressures, which are persistent, and timing or base effects, which are not,” he added.

Jose Enrique “Sonny” A. Africa, executive director of the think tank IBON Foundation, said the higher debt servicing is the “inevitable outcome of inexorably rising debt stock compounded by higher rates and foreign exchange effects.”

“External interest payments will definitely keep rising, especially as the peso weakens further,” he added.

The local currency hit a new record low, weakening by 14 centavos to close at P60.69 from its P60.55 finish on Monday, data from the Bankers Association of the Philippines showed.

Meanwhile, amortization payments soared by 374.8% to P9.85 billion in January from P2.08 billion in the same month a year ago.

This was mainly composed of principal payments on domestic debt, which surged by 2,453.9% to P8.1 billion in January from P317 million in the same month last year.

Amortization paid on foreign debt was flat at P1.76 billion in January.

“Higher domestic amortization in January 2026 mainly implies scheduled repayments and active debt rollover, not necessarily fiscal stress,” said Mr. Peña-Reyes.

“Combined, however, with rising interest payments, it also highlights a heavier overall debt service burden, even if the month-to-month composition looks volatile,” he added.

IBON Foundation’s Mr. Africa said that the higher domestic amortization signals growing rollover dependence and liquidity pressure.

“The Philippines is in the right strategic direction with its long-standing bias for domestic borrowing, made even more sensible amid volatility like now when external markets should be used selectively,” he added.

However, he said that the country needs to fix structural fiscal gaps to avoid compounding debt service.

“The emphasis shouldn’t just be on debt management mechanics but more on who bears the burden of the current shock and how to prevent amplification of inequality and slowdown,” he added.

The NG debt stock increased to P18.13 trillion at the end of January due to frontloaded financing programs, up by 2.41% from the P17.71 trillion seen as of end-December.

“Frontloading looks immediately sound but may lock in high interest rates, and in a way just shifts today’s oil shock into tomorrow’s fiscal crisis,” said Mr. Africa.

“There’s an unstated policy bias toward protecting creditors over people in need, where relying on borrowing instead of progressive taxes such as on billionaire wealth or windfall profits is a form of socializing the costs of supply-side shocks while privatizing gains,” he added.