The Philippines’ external debt service burden rose by 13.95 percent to $15.735 billion as of the end of November 2024 from $13.808 billion in the same period in 2023, based on Bangko Sentral ng Pilipinas (BSP) data.

The latest debt service burden is equivalent to 3.9 percent of gross domestic product, higher than the previous year’s 3.4 percent.

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

Meanwhile, prepayments or repayments of foreign currency obligations increase the debt service burden.

During the period, the principal debt service burden amounted to $8.39 billion, up 12.9 percent from $7.431 billion of the previous year. Principal external debt service are mostly fixed and revolving short-term liabilities.

Interest payments also increased by 15.18 percent to $7.345 billion versus $6.377 billion in 2023.

The debt service burden represents both principal and interest payments after rescheduling. The principal and interest payments on fixed medium- to long-term credits include International Monetary Fund credits, other loans, and facilities.

The BSP has noted that 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 as of end-September 2024 against the previous year’s 10.4 percent.

At current levels, the DSR measures the country’s capacity to pay for maturing loans, and the gross international reserves (GIR) are considered adequate cover for the country’s short-term debt.

The country’s GIR or the US dollar stock reached $106.8 billion as of end-December 2024.

The debt service burden vis-à-vis the GIR is equivalent to a ratio of 648.3 percent as of end-September 2024. This was lower compared to the same time in 2023 of 686.8 percent.

With more foreign borrowings and non-residents’ investments in onshore debt securities, the government and the private sector’s outstanding external debt expanded to $139.643 billion as of end-September last year, or up by 17.5 percent from $118.833 billion in the same period in 2023.

Of the total foreign debt, the public sector accounted for $86.88 billion, up by 17.9 percent from $73.701 billion of the previous year. About $80.13 billion of public sector obligations are government loans, while the remaining $6.76 billion are borrowings of government-owned and -controlled corporations, government financial institutions, and the BSP.

As of end-September, private sector debt also rose by 16.9 percent to $52.762 billion compared to $45.132 billion in 2023.