The Philippines’ outstanding foreign debt rose by 6.6 percent in the first quarter of the year, as the government borrowed more to fund infrastructure and budgetary needs, while private banks tapped foreign lenders for short-term financing to manage liquidity.

Data from the Bangko Sentral ng Pilipinas (BSP) showed that the country’s foreign debt climbed to $146.7 billion as of March 2025 from $137.6 billion in the previous quarter.

“The increase in external debt in the first quarter was primarily attributed to the national government’s fund-raising activity meant to support infrastructure projects and other budgetary requirements,” the BSP said in a statement released on Friday, June 13.

The national government borrowed a total of $5.1 billion during the period. This amount was acquired through the sale of global bonds and loans from foreign development lenders.

Local banks also tapped overseas markets during the period to secure short-term funding for trade activities and liquidity requirements, the BSP said.

On an annual basis, the rise in external debt was also attributed to $7.8 billion in government bond issuances and $6.1 billion in foreign borrowings by local banks.

As of the first quarter, the country's foreign debt was equivalent to 31.5 percent of its gross domestic product (GDP).

While this was higher than the previous quarter’s 29.8 percent, the BSP said the current level “still reflects the country’s ability to repay its external obligations.”

As of end-March, the country’s short-term external debt, based on remaining maturity, reached $32.7 billion.

For the BSP, “this level remains well-covered by the country’s gross international reserves (GIR)” or US dollar stock, which amounted to $106.7 billion, providing 3.3 times cover for short-term obligations.

The central bank asserted that the country’s US dollar stock level “continues to provide a robust external liquidity buffer, despite the downward trend of the short-term external debt cover in recent years.”

Meanwhile, the debt service ratio declined to 8.4 percent from nine percent a year earlier. It is another measure of the country’s ability to repay debt, comparing loan payments to earnings from exports and other foreign income sources.

The BSP attributed this decline to lower principal and interest payments by resident borrowers in the first quarter.