The Philippines’ external debt service burden rose to $5.87 billion at the end of May from $5.84 billion in the same period last year, led by higher principal payments on long-term loans, data from the Bangko Sentral ng Pilipinas (BSP) showed.
Data from the BSP released on Tuesday showed the 0.51-percent year-on-year increase was due to a 2.71-percent rise in principal payments, which reached $2.65 billion. This was higher than $2.58 billion a year ago.
Interest payments dipped slightly by 1.23 percent to $3.22 billion from $3.26 billion.
The increase in debt servicing comes as the country’s total foreign debt climbed 14 percent to $146.74 billion as of end-March 2025. The foreign borrowings were equivalent to 31.5 percent of the country’s gross domestic product (GDP) and 27.8 percent of its gross national income (GNI).
The ratio of the country’s external debt service burden to GNI dropped to 2.5 percent in the first quarter from 2.7 percent a year earlier. The ratio to GDP also fell to 2.8 percent from 3.1 percent.
The BSP said the debt service burden includes principal and interest payments on long-term loans, but excludes prepayments and the principal of short-term liabilities.
Michael Ricafort, chief economist at Rizal Commercial Banking Corp. (RCBC), attributed the higher external debt and servicing to wider budget deficits, which prompted the government to seek more external borrowings.
He said the higher external debt in recent years also helps diversify the country’s borrowing sources and provides greater liquidity for global bond markets.
Ricafort said the government has been reducing the share of foreign borrowings in favor of a larger domestic borrowing share. This strategy, he said, helps manage foreign exchange risks associated with external debt.
“It is important that foreign borrowings are as long-term in nature as possible to prevent a bunching of external borrowings over the short-term,” Ricafort said.
“This helps to sustainably manage external debt servicing and foreign exchange risks,” he said.
