The Philippines' external debt service burden increased by 16.81 percent to $12.85 billion as of end of September compared to the same time last year, which was $11 billion, based on Bangko Sentral ng Pilipinas (BSP) data.

The external debt service data is an indicator of debt sustainability, which refers to a country’s capacity to meet its current and future payment obligations without debt relief, extraordinary assistance, or going into default.

At the end of the third quarter of 2024, external debt service principal payments reached $6.295 billion, up 16.19 percent from the same time in 2023, which was $5.928 billion.

Interest payments totaled $5.925 billion, up from $5.072 billion last year. This represents an increase of 16.81 percent.

Principal external debt service is mostly fixed medium- to long-term credits, while interest payments are on fixed and revolving short-term credits of banks and non-banks.

BSP officials said that when both the government and the private sector make a lot of prepayments or repayments, the debt service burden increases. It declines when there are no prepayments of loans and bond redemptions or repayments.

As of the end of September, the country’s outstanding external debt rose 17.5 percent to $139.643 billion, compared to $118.833 billion in the same period last year. The external debt increased because of more foreign borrowings by both the government and the private sector, and non-residents’ investments in onshore debt securities.

The public sector's external debt was up at $86.88 billion, which was 62.2 percent of the total outstanding external debt. About 92.2 percent, or $80.13 billion, of public sector obligations are government loans, while the remaining 7.8 percent, or $6.76 billion, are borrowings of government-owned and controlled corporations, government financial institutions, and the BSP.

Private sector debt also increased to $52.76 billion during the period due to a $2.52 billion increase in local banks’ other liabilities after borrowing from offshore markets. Corporates’ debt stock also increased because of the $599.04 million net acquisition by non-residents from residents of debt securities and a $163.4 million positive foreign exchange revaluation.

During the period, the debt service ratio (DSR), which relates principal and interest payments (or the debt service burden) to exports of goods and receipts from services and primary income, improved to 11.6 percent from 10.4 percent in the same period last year.

According to the BSP, the DSR and the gross international reserves (GIR) cover the country’s short-term debt and measure foreign exchange resources to pay for maturing loans. As of the end of November, the GIR amounted to $108.465 billion.