Philippine government debt service declines as September principal payments fall

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Debt service declines in September

Highlights

Philippine national government debt service falls 36.73% year on year to P207.46 billion in September, driven by a 50.49% decline in principal repayments.
Nine-month debt service bill drops 11.69% to P1.65 trillion as principal amortization decreases 26.99% to P878.21 billion, while interest payments rise 15.95% to P772.05 billion.
Outstanding government debt reaches a record P19.66 trillion at end-September, up 0.27% from August and 12.63% higher year on year.

September debt payments and nine-month trend

As reported by BusinessWorld, citing the Bureau of the Treasury, total national government debt service falls by 36.73% year on year to P207.46 billion in September from P327.89 billion, although it jumps 172.56% from P76.12 billion in August. Debt service covers principal and interest payments on domestic and foreign obligations.

Amortization accounts for 58.75% of September debt payments, with principal repayments declining by 50.49% to P121.89 billion from P246.19 billion a year earlier. Domestic amortization drops 53.7% to P109.97 billion from P237.93 billion, while foreign debt amortization rises 44.26% to P11.92 billion from P8.26 billion.

Interest payments, meanwhile, increase by 4.73% to P85.57 billion in September from P81.7 billion a year earlier. Interest on domestic debt reaches P69.05 billion, up 5.78% from P65.27 billion, including P44.67 billion for fixed-rate Treasury bonds, P19.09 billion for retail Treasury bonds and P5.25 billion for Treasury bills, while interest on foreign borrowings inches up 0.57% to P16.53 billion.

For the first nine months, the debt service bill declines by 11.69% to P1.65 trillion from P1.87 trillion in the same period last year. Principal repayments make up 53.22% of the total, with amortization falling 26.99% to P878.21 billion, while interest payments rise 15.95% to P772.05 billion, led by an 18.27% increase in domestic interest costs to P584.74 billion.

Debt burden outlook and market implications

Jonathan L. Ravelas, senior adviser at Reyes Tacandong & Co., says the lower overall bill reflects reduced principal repayments and base effects rather than a lighter debt burden. He says debt servicing should remain manageable in the months ahead, with lower rates helping offset the effect of a still-rising debt stock.

The government’s outstanding debt climbs to a fresh high of P19.66 trillion at end-September, up 0.27% or P53.47 billion from end-August. The total is 12.63% higher than P17.46 trillion a year earlier and 11.03% above the P17.71 trillion recorded at end-2025.

Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., says the lower September bill may reflect smaller volumes of maturing government debt, principal and interest payments, as well as other payables during the month. He adds that debt servicing in coming months will depend on interest payments and the U.S. dollar-peso exchange rate, with year-end debt payments typically widening the budget deficit toward yearend.

In the currency market, the peso strengthens by 11 centavos on Friday to close at P63.74 per dollar from P63.85 a day earlier. Month on month, however, the peso weakens by P1.10 on Oct. 30 from its P62.64 finish on Sept. 30.

In our earlier coverage of the Philippines’ planned sovereign bond reforms—including a new pricing convention for peso government bonds and targeted inclusion in J.P. Morgan’s Government Bond Index-Emerging Markets—we explained how these steps could improve liquidity, price discovery, and broaden the investor base. We also noted that the benefits for borrowing costs and the wider economy still hinge on factors like global interest rates, exchange-rate expectations, and fiscal credibility, and that market modernization alone does not guarantee stronger real-economy investment.

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