‘Increasing debt service bill raises crisis risks’
A
S the national government settled a record P2.020 trillion in debt obligations in 2024, an economist warned that ballooning debt payments could push the Philippines towards a financial crisis. Latest data from the Bureau of the Treasury (BTr) showed the country’s debt payments swelled by 26 percent to P2.020 trillion in 2024 from P1.603 trillion in 2023. Ateneo de Manila University economist Leonardo A. Lanzona told the BusinessMirror that higher debt payments may trigger the acquisition of new and higher-interest loans to pay off existing obligations.
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“This spiral can lead to a financial crisis,” Lanzona said, which could quickly happen once the public loses its confidence in the government to pay off its debts. BTr data showed interest payments increased by 21.48 percent to P763.313 billion in 2024 from P628.333 billion in 2023. About P539.829 billion in interest was paid to domestic sources, 23.88 percent higher than the P435.742 billion settled last year. This includes interest payments amounting to P32.685 billion for Treasury bills, P340.504 billion for fixed-rate Treasury bonds, P153.921 billion for retail Treasury bonds and P12.719 billion for other
liabilities. The government also cleared P223.484 billion in interest payments to foreign financiers, 16.04 percent higher than the P192.591 billion in 2023. Meanwhile, amortization or the repayment of loan principal jumped by 28.92 percent to P1.257 trillion in 2024 from P975.278 billion a year ago. Amortization shelled out to foreign sources nearly doubled to P239.292 billion in 2024 from P121.113 billion. Domestic lenders were also paid P1.257 trillion in amortization in 2024, up by 28.92 percent from P975.278 billion in 2023.
“As the government incurs more debts, financial institutions will no longer be willing to lend money for the government and the rest of the country. This forces interest rates to rise, gradually forcing the financial institutions to close,” Lanzona said. If the government continues to take on more expensive debt, since tax revenues are just enough to pay for its expenditures, Lanzona said more costly debt will pile up—leading to fiscal risks and more unappropriated programs in the future. This will also dim government hopes of obtaining an “A” credit rating for the Philippines, he said. “The government is able to stave See “Increasing,” A2
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A broader look at today’s business Monday, March 17, 2025 Vol. 20 No. 156
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FOREIGN DEBT CLIMBS TO RECORD $137.63B n
PHL meat imports jump by 50% in Jan
By Reine Juvierre S. Alberto
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@reine_alberto
HE Philippines’s external debt reached an all-time high of $137.63 billion by endDecember 2024, as the government and the private sector borrowed more to meet their liquidity requirements, according to the Bangko Sentral ng Pilipinas (BSP). Despite this, BSP said the country’s external debt as a share of the economy “remains at a prudent level” as it declined to 29.8 percent from 30.6 percent in the third quarter. Central bank data showed the country’s external debt grew by 9.75 percent to $137.628 billion in 2024 from $125.394 billion in 2023. “The increase was driven primarily by net availments of $9.61 billion to address liquidity requirements of the public and private sector,” the BSP said. Public sector net availments for the 12-month period amounted to $5.59 See “Foreign,” A2
By Ada Pelonia
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GOVT STEPS UP TO LOWER FOOD COSTS A Kadiwa ng Pangulo store in Intramuros, Manila, drew large crowds Sunday, March 16, 2025, offering rice for as low as P29 per kilo, along with fresh vegetables and fruits. This initiative supports the government’s push for food affordability, following the House Murang Pagkain Supercommittee’s call for an SRP formula on key commodities and recent measures like the rice import tariff cut to 15 percent (EO 62, June 2024) and the Anti-Agricultural Economic Sabotage Act (RA 12022, September 2024) to combat price manipulation. ROY DOMINGO
PHL wants to supply medicines to Southeast Asia By Bless Aubrey Ogerio
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HE Philippines is targeting to export “highquality” medicines and medical supplies to its neighbors in Southeast Asia from its pharmaceutical economic zones or pharmazones. The Philippine Economic Zone Authority (Peza) said this is one of the chief goals of the government in rolling out a new policy on the establishment of pharmazones. Peza said these ecozones seek to improve the quality of medicines manufactured in the Philippines and cut drug prices. Approved by the Peza board on February 20, the new policy
lays down the rules for setting up pharmazones, which are expected to attract major investments in pharmaceuticals, medical devices and healthcare industries. “These zones are expected to attract substantial pharma, medical, and healthcare-related investments, advance technology, and increase local production and research—creating numerous jobs and enhancing the country’s export potential—positioning the Philippines as a competitive player in the global pharmaceutical market,” Peza Director General Tereso Panga said in a statement. “As investors come in using the Philippines as a manufac-
turing hub in Southeast Asia for dependable medicines and bring in their cutting-edge technologies, I am sure that higher quality of medicines and medical supplies will be developed for the whole region and ultimately increase the availability and lower the price of medicines for the Filipino people,” he added. The guidelines indicated that pharmazones must cover at least 10,000 square meters in the National Capital Region and other metropolitan areas and those in provinces must span a minimum of 50,000 square meters. Companies operating in these zones, such as developers and
registered business enterprises, will be eligible for tax perks under Title XII of the amended Tax Code. Meanwhile, ecozone developers, operators and utilities that dedicate at least 70 percent of their leasable or saleable space to exporters will get the same incentives as export enterprises, per Peza Memorandum Circular 2023-033. Panga expressed optimism that the policy will be beneficial for the pharmaceutical sector, citing stronger collaboration with the Office of the Special Assistant to the President for Investment and Economic Affairs and the Food and Drug Administration.
@adapelonia
HE country’s meat imports surged by nearly 50 percent in January, driven by higher pork and chicken purchases abroad, based on latest government data. Figures from the Bureau of Animal Industry (BAI) showed that meat imports jumped by 49.97 percent to 137,999 metric tons (MT) in January from 92,021 MT recorded in the previous year. Pork shipments registered the highest increase as it soared by 65.35 percent in the first month of the year to 70,449 MT from 42,607 MT in 2024. The bulk of the imports were pork cuts and offals at 25,760 MT and 25,298 MT, respectively. The Meat Importers and Traders Association (Mita) said African swine fever (ASF) outbreaks which upended the supply chain could have been the “main driver” behind this growth. Mita President Emeritus Jesus Cham said pork output could settle at 1.15 million metric tons See “PHL,” A2
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RECESSION WHAT IT IS AND WHY MARKET ANXIETY IS RISING HAMZATURKKOL VIA CANVA
PESO EXCHANGE RATES n US 57.3360 n JAPAN 0.3881 n UK 74.2731 n HK 7.3773 n CHINA 7.9149 n SINGAPORE 42.9226 n AUSTRALIA 36.0185 n EU 62.2382 n KOREA 0.0395 n SAUDI ARABIA 15.2916 Source: BSP (March 14, 2025)