The Philippine external debt service burden (DSB) declined by 22.8 percent to $12.02 billion as of end-November 2025, from $15.57 billion in the same period in 2024, due to a decline in both principal and interest payments.

The latest data from the Bangko Sentral ng Pilipinas (BSP) showed that the drop in the country’s servicing of its foreign debt was driven by a massive decline in principal payments and a slight decrease in interest payments (IPs).

Amortization, or principal payments, plunged by 41.9 percent to $4.77 billion as of end-November, from $8.21 billion during the same period in 2024. IPs also eased by 1.6 percent to $7.25 billion during the period, from $7.37 billion a year earlier.

Rizal Commercial Banking Corp. (RCBC) chief economist Michael Ricafort said the country’s easing foreign DSB was “largely due to lower maturities of foreign debt in terms of principal payments versus year-ago levels.”

This comes amid “a lower share of foreign borrowings in the total borrowing mix of the national government (NG) to better manage risk of foreign exchange (forex) losses entailed in foreign borrowings.”

As of end-September 2025, the Philippines’ foreign debt increased by 6.8 percent to $149.09 billion from $139.64 billion during the same period in 2024.

Government debt accounted for $96.3 billion, or nearly two-thirds of total, while the private sector accounted for approximately $52.8 billion.

Foreign borrowings were equivalent to 27 percent of the country’s gross national income (GNI) as of end-September.

This ratio slightly eased from 27.1 percent during the same period in 2024. It, meanwhile, climbed to 30.9 percent of gross domestic product (GDP) as of end-September, from 30.6 percent a year earlier.

GNI measures the total income generated by a country’s residents, both domestically and abroad, while GDP only accounts for local output.

By end-November 2025, the country’s capacity to pay improved significantly, with the DSB-to-export shipments ratio falling to 20.7 percent from 30.6 percent in 2024, and the DSB-to-current account receipts ratio dropping to 7.9 percent from 10.9 percent a year ago.

Furthermore, the liquidity buffer strengthened as gross international reserves (GIR) rose to $111.25 billion, resulting in a GIR-to-DSB ratio of 828.6 percent, a sharp increase from 654.3 percent in 2024.

According to the BSP, the foreign debt service burden represents principal and IPs after rescheduling.

This covers payments on medium- 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 IPs 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 bank and nonbank obligations.

Looking ahead, Ricafort said lower foreign borrowings in the government’s debt mix and possible United States (US) Federal Reserve rate cuts could further bring down the country’s foreign debt payments.