The Philippines' foreign debt climbed by almost a tenth year-on-year to $137.63 billion as of end-2024, as both the government and private firms borrowed more from foreign sources for their productive activities, the Bangko Sentral ng Pilipinas (BSP) reported.
In a statement on Friday, March 14, the BSP said the end-2024 external debt level increased by 9.8 percent from $125.39 billion at end-2023.
The BSP primarily attributed the higher year-end foreign debt to net borrowings totaling $9.61 billion to meet liquidity requirements.
The public sector accounted for $5.59 billion in net borrowings, while the private sector accumulated $4.03 billion, BSP data showed.
Furthermore, non-residents' net acquisition of Philippine debt securities, amounting to $3.37 billion, and adjustments of $634.76 million, contributed to the overall increase in external debt, the central bank said.
However, a negative foreign exchange (FX) revaluation of $1.39 billion on foreign-denominated debt tempered the rise, it added.
Despite the full-year increase, external debt declined by $2.02 billion in the fourth quarter of 2024, making it 1.4-percent lower than the $139.64 billion recorded at end-September last year.
The quarter-on-quarter reduction in external debt was accompanied by a decrease in the external debt ratio, which fell to 29.8 percent from 30.6 percent in the previous quarter. This improvement reflects a combination of reduced borrowing and the Philippines' 5.2-percent real gross domestic product (GDP) growth in the fourth quarter of 2024, as well as 5.6-percent growth for the full year, the central bank explained.
For the BSP, the Philippines' foreign debt levels remain manageable, with key indicators showing the country is well-positioned to meet its obligations.
In particular, the BSP noted that other key indicators related to the country's external debt remained at sustainable levels. For instance, gross international reserves (GIR) stood at $106.26 billion at the end of 2024, providing a coverage ratio of 3.81 times for short-term debt.
The debt service ratio (DSR), which measures the country's ability to meet principal and interest payments, rose to 11.5 percent from 10.3 percent year-on-year, driven by higher debt service payments.
Both the DSR and GIR cover reflect the adequacy of the country's FX resources for maturing obligations.
According to the BSP, the decline in external debt during the final quarter of 2024 was influenced by several factors, such as a negative FX revaluation of borrowings denominated in other currencies, which resulted in a $1.29-billion decrease.
The appreciation of the US dollar, driven by stronger US economic performance and expectations surrounding the US Federal Reserve's future policy, also played a significant role, the BSP added.
Additionally, the central bank disclosed that non-residents offloaded $835.33 million in Philippine debt securities, further contributing to the reduction in external debt.
The quarter also saw a shift from the net borrowing observed in the first three quarters of 2024, with net repayments amounting to $133.51 million in the last quarter. This decline was driven by reduced borrowing by non-bank public sector entities and repayments by both the private sector and the banking sector, according to the BSP.
As of December 2024, the Philippines' external debt continued to be largely composed of medium- and long-term (MLT) borrowings. MLT debt totaled $109.72 billion, accounting for 79.7 percent of total external debt, with the remaining 20.3 percent consisting of short-term debt.
The majority, or 54.4 percent, of MLT debt carries fixed interest rates; 44.5 percent has variable rates.
Public sector external debt decreased by 1.8 percent in the fourth quarter of 2024 to $85.34 billion, primarily due to a $1.44-billion negative FX revaluation. Net repayments and prior periods' adjustments also contributed to this decline.
The national government holds the largest share of public sector debt, totaling $79.31 billion, representing 92.9 percent of the public debt stock.
Private sector external debt saw a slight decrease, falling by 0.9 percent to $52.29 billion at the end of the fourth quarter. This drop was mainly driven by net acquisitions of offshore debt securities ($870.03 million), negative FX revaluation ($154.11 million), and net repayments ($70 million).
According to BSP data, the Philippines' debt composition shows that the largest share is owed to official creditors, including multilateral and bilateral institutions, amounting to $54.12 billion (39.3 percent). Borrowings in the form of bonds and notes account for $45.11 billion (32.8 percent), while obligations to foreign banks and financial institutions stand at $31.22 billion (22.7 percent).
Japan remains the Philippines' largest creditor, with $15.18 billion, followed by Singapore ($5.06 billion) and the Netherlands ($4.55 billion).
In terms of currency composition, the majority of the country's external debt is denominated in US dollars ($101.79 billion, or 74 percent), followed by Philippine peso ($12.68 billion, or 9.2 percent) and Japanese yen ($10.33 billion, or 7.5 percent). Other currencies, including the euro and special drawing rights (SDRs) of the International Monetary Fund (IMF), account for the remainder.