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Manila Bulletin devider Business devider Banking & Finance devider Philippine foreign debt service burden drops 35% on lower principal payments

Philippine foreign debt service burden drops 35% on lower principal payments

Published May 19, 2025 12:00 am  |  Updated May 17, 2025 04:34 pm

At A Glance

  • The Philippines' external debt service burden declined by 34.8 percent to $1.59 billion as of end-February 2025 from $2.44 billion in the same period in 2024, data from the central bank showed.
The Philippines’ external debt service burden declined by 34.8 percent to $1.59 billion as of end-February 2025 from $2.44 billion in the same period in 2024, data from the central bank showed.
The latest data from the Bangko Sentral ng Pilipinas (BSP) showed that the decline in the country’s debt service burden on its foreign borrowings was driven by the 68.1-percent drop in principal payments.
It was massively reduced to $383 million in the first two months of 2025 from $1.18 billion last year.
Similarly, the country’s interest payments slipped by four percent to $1.21 billion this year from $1.26 billion in 2024.
Rizal Commercial Banking Corp. (RCBC) chief economist Michael Ricafort said that more than anything else, this development is “largely a function of lower amounts” of matured foreign debt of the Marcos administration that needed to be repaid. He was comparing this level to the 2024 level.
“To a lesser extent, the one-percentage-point rate cuts by the United States (US) Federal Reserve since September 2024 helped slightly lower interest payments on foreign debt,” Ricafort added.
“For the coming months, external debt service payments would be a function of maturing foreign debts that needed to be paid,” the economist further said.
According to the BSP, the debt service burden represents principal and interest payments after rescheduling.
This covers payments on medium-term to long-term loans, including those from the Washington-based multilateral lender International Monetary Fund (IMF), Paris Club agreements, commercial bank restructurings, and new money facilities.
It also includes interest payments on fixed and revolving short-term liabilities of banks and nonbanks.
However, it excludes prepayments on future maturities of foreign loans and principal payments on short-term obligations of banks and nonbanks.
The BSP’s latest data showed the Philippines’ outstanding external debt rose by 9.8 percent to $137.63 billion as of end-2024 from $125.39 billion in 2023.
As such, the external debt-to-gross domestic product (GDP) ratio rose to 29.8 percent by end-2024, up from 28.7 percent at the end of 2023.
By end-2024, the external debt service burden inched up to 3.7 percent of GDP, slightly higher than 3.4 percent a year earlier.

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Bangko Sentral ng Pilipinas (BSP) external debt service
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