The Philippines’ external debt service burden fell more than 21 percent in the first nine months of the year, providing some relief to the national balance sheet even as total foreign obligations climbed to a fresh record.

Preliminary data released by the Bangko Sentral ng Pilipinas (BSP) showed that the cost to service foreign debt dropped to $10.08 billion in January to September, compared with $12.79 billion in the same period in 2024.

The decline was primarily driven by a sharp reduction in principal repayments, which tumbled 39.1 percent to $4.14 billion from $6.84 billion a year earlier.

Interest payments remained largely stable, edging down 0.6 percent to$5.91 billion. The cooling of the debt service burden comes as a reprieve for the Marcos administration, which has been navigating elevated borrowing costs and a persistent budget deficit.

While the immediate cost of servicing debt eased, the country’s total external debt stock reached a new peak of or $149.09 billion. This represents a 6.8 percent increase from the previous year.

The central bank attributed the rise in the debt pile to the continued issuance of government securities to fund the budget gap, as well as an influx of non-resident investors who acquired $1.5 billion in Philippine debt instruments during the third quarter.

Public sector debt continues to dominate the mix, accounting for $96.3 billion, or roughly 64.6 percent of the total. The private sector holds the remaining $52.8 billion.

Despite the record-high nominal debt levels, the central bank maintained that the country’s debt-to-gross domestic product (GDP) ratio remains within manageable limits.

The external debt-to-GDP ratio stood at 30.9 percent as of September, a slight increase from 30.6 percent a year ago.

The debt service burden as a percentage of gross national income (GNI)—a measure of economic health that includes earnings from overseas Filipinos—improved significantly.

The ratio fell to 2.5 percent from 3.4 percent in 2024. This metric is closely watched by credit rating agencies as an indicator of the country's long-term capacity to meet international financial obligations.

The BSP’s debt service figures include principal and interest payments on medium- to long-term loans, including those from the International Monetary Fund and Paris Club agreements. The data excludes prepayments on future maturities and certain short-term bank obligations.