The Philippines’ foreign debt service burden declined to $8.43 billion as of end-August 2025 from $8.73 billion in the same period last year following a drop in both principal and interest payments, the Bangko Sentral ng Pilipinas (BSP) said over the weekend.
The 3.43 percent year-on-year decrease was led by lower payments on long-term loans and interest on short-term liabilities.
Principal payments dropped 7.89 percent to $3.21 billion from $3.49 billion previously, while interest payments decreased 0.44 percent to $5.22 billion from $5.24 billion last year.
The BSP said the external debt service burden figure for August was equivalent to 2.9 percent of the gross domestic product as of end-June, and its ratio to the latest June gross national income figure stood at 2.5 percent.
These figures exclude prepayments and principal payments of short-term liabilities.
Rizal Commercial Banking Corp. (RCBC) chief economist Michael Ricafort said the decline is a continuing trend amid a reduction in foreign borrowing in the national government’s overall financing mix.
Ricafort cautioned that this trend is partially offset by continued budget deficits requiring more government borrowings, both local and foreign.
He suggested that robust anti-corruption measures would lead to more disciplined government spending, resulting in reduced wastage, narrower budget deficits and a lower need for additional borrowings.
Ricafort said the continuous rate cuts by the Federal Reserve since last year and possible future cuts would also help reduce external debt servicing, particularly for interest payments on foreign debts.
