Double-digit increases in both principal and interest payments drove the Philippines’ external debt service burden up by $2.31 billion in 2024, reaching $17.16 billion.
According to the Bangko Sentral ng Pilipinas (BSP), it reflects a nearly 16 percent increase from $14.85 billion in the previous year.
Last year’s external debt service burden was equivalent to 3.7 percent of gross domestic product (GDP), higher than the previous year’s 3.4 percent.
The external debt service burden measures a country’s ability to repay its debt without needing relief, special assistance, or risk default. A higher debt service burden means a country allocates a larger portion of its income for debt repayment.
Throughout 2024, the principal debt service burden climbed to $8.94 billion, more than 15 percent higher than the $7.76 billion in the previous year.
Likewise, interest payments increased by nearly 16 percent to $8.22 billion in 2024, up from $7.1 billion in 2023.
As per the BSP, the debt service burden refers to both principal and interest payments made after rescheduling. It includes payments on medium- and long-term loans, such as International Monetary Fund (IMF) credits, other loans, and facilities.
It also covers interest payments on fixed and revolving short-term liabilities owed by banks and non-banks.
Meanwhile, the debt service ratio (DSR) increased to 11.5 percent in 2024, up from 10.3 percent the previous year. The DSR measures the share of principal and interest payments against export earnings and income from services and primary sources.
To recall, the country’s gross international reserves (GIR) or the US dollar stock reached $106.26 billion in 2024.
The debt service burden relative to the country’s reserves dropped to a little over 619 percent last year, down from nearly 699 percent a year earlier.
Driven by increased foreign borrowings and foreign investments in local debt papers, the government and private sector’s external debt rose to $137.63 billion in 2024, up by nearly 10 percent from $125.39 billion in 2023.
Of these, the public sector accounted for $85.34 billion, which also increased by nearly 10 percent from $77.83 billion in the previous year.