The Philippines’ total external debt service burden dropped 6.2 percent to $6.72 billion as of end-June 2025 from $7.16 billion in the same period last year, with interest payments making up a bulk of the total amount.
Data from the Bangko Sentral ng Pilipinas (BSP) showed that principal payments for the period of January to June amounted to $2.77 billion, down 13.14 per cent from $3.19 billion a year ago.
Interest payments also declined by 0.68 percent from $3.98 billion last year to $3.95 billion in June.
The decrease in debt servicing comes as the country’s total foreign debt climbed 14.36 percent to $148.87 billion in the second quarter of 2025. The foreign borrowings were equivalent to 31.2 percent of the gross domestic product (GDP) and 27.3 percent of its gross national income (GNI).
The ratio of the country’s external debt service burden to its GDP and GNI similarly declined to 2.8 per cent and 2.5 per cent, respectively.
The BSP said the debt service burden consists of principal and interest payments on long-term loans, including interest payments on fixed and revolving short-term liabilities. It excludes prepayments and principal payments of short-term liabilities.
Michael Ricafort, chief economist at Rizal Commercial Banking Corp. (RCBC), said external debt is largely a function of the country’s budget deficit, which has been offset by the lower share of foreign borrowings in the national government’s (NG) overall financing mix to better manage foreign exchange risks.
Ricafort said most NG foreign borrowings are long-term in nature, with some carrying the longest possible tenors.
He said the possible inclusion of the Philippines in the JPMorgan Emerging Market Global Bond Index could improve demand for local bonds, potentially lowering the government’s financing costs.
