Lower interest payments and amortization expenses pulled down the national government’s debt servicing in May, data released by the Bureau of the Treasury showed.

Debt payments in May settled at P26.64 billion, a 2.79-percent decrease from the P27.40 billion recorded a year earlier.

Interest payments, which accounted for 74.47 percent of the total, eased by 6.69 percent to P18.35 billion from P19.66 billion last year.

Domestic interest payments fell by 8.29 percent to P14.46 billion in the month from P15.77 billion in the previous year, while foreign ones plunged by 0.17 percent to P3.88 billion from P3.89 billion.

Amortization expenses, meanwhile, shrank by 18.72 percent to P6.28 billion from P7.73 billion a year ago. Foreign amortization accounted for the total as no domestic amortization was posted during the month.

Year-to-date, debt payments soared by 87.42 percent to P564.96 billion from P301.44 billion in the same period in 2019.

Last year, the government paid P842.44 billion to creditors, a 13.87-percent surge from P725.58 billion in 2018.

The Treasury bureau earlier reported that the national government’s outstanding debt surged to an all-time high P8.89 trillion at the end of May as it ramps up its domestic and external borrowings to fund its coronavirus disease 2019 (Covid-19) pandemic response.

The amount was up by 3.4 percent or P290.53 billion from the P8.60 trillion in April, “primarily due to the increased reliance on government securities issuance and external loan availments to fund Covid-19 response amid a sharp drop in revenue collections.”

Finance Secretary Carlos Dominguez 3rd said earlier the Philippines is capable of paying off its growing number of loans that were mostly used to support the government’s response to the Covid-19 pandemic.

“Because our economy has slowed down during the Covid crisis, we have not been able to collect taxes as we had planned… and we have also been spending a lot of money on our Covid response,” Dominguez said, adding the government had spent about P375 billion on that response alone.

“Because our collections are down and our expenses are up, we had to borrow money,” he said.

According to him, the government had planned to raise the country’s debt to 50 percent of gross domestic product this year from 39 percent in 2019 to take advantage of low interest rates.

The repayment of these loans, Dominguez said, would come from tax collections once people start working and reopen their businesses, which would eventually lead to economic recovery.

“The debt is very manageable and it is affordable for us,” he said. “So I’d like to assure the entire Filipino people that we have the capacity to borrow. We are borrowing at very low rates, and we have the capacity to pay these loans in the future.”