Philippine foreign debt service bill soars

The Philippines’ debt service on foreign loans continued to climb amid higher principal payments as of February, preliminary data from the Bangko Sentral ng Pilipinas (BSP) showed.

At end-February, the country’s external debt service burden stood at USD 2.127 billion, increasing by 31.54% from the USD 1.617 billion posted in the comparable year-ago period.

This was the second consecutive month of increase in the external debt service bill.

Based on data posted on the central bank’s website, principal payments more than doubled (129.02%) to USD 884 million at end-February from USD 386 million a year earlier.

Interest payments, on the other hand, inched up by 0.89% year on year to USD 1.243 billion at end-February from USD 1.232 billion.   

However, Jonathan L. Ravelas, a senior adviser at Reyes Tacandong & Co., noted that while the external debt service bill rose sharply, it merely reflects “timing and structure” rather than a sudden deterioration.

“The big story is the 129% surge in principal payments — this tells us maturities are clustering, meaning we’re repaying more obligations that simply fell due, rather than borrowing improperly,” he added in a Viber message.

“Interest payments, in contrast, are relatively flat, which suggests borrowing costs are stabilizing despite the high global rate environment.

The debt service bill represents principal and interest payments after rescheduling, according to the BSP.

This includes principal and interest payments on fixed medium- and long-term credits, including International Monetary Fund credits, loans covered by the Paris Club and commercial bank rescheduling, and New Money Facilities.

It also covers interest payments on fixed and revolving short-term liabilities of banks and nonbanks.

However, the debt service data exclude prepayments on future years’ maturities of foreign loans and principal payments on fixed and revolving short-term liabilities of banks and nonbanks.

Mr. Ravelas said that the latest foreign debt service bill remains manageable, although debt maturities must be extended, alongside diversified funding sources and stronger dollar inflows, to prevent future cost issues from mismanagement.

“From a macro perspective, this is manageable — but it’s a signal to stay disciplined,” he said. “The Philippines still needs to ensure strong foreign exchange earnings, particularly from exports and remittances, to comfortably service these obligations. The key risk to watch is liquidity — if global financial conditions tighten again, refinancing could become more expensive.”

Latest BSP data showed the external debt service burden as a share of gross domestic product  stood at 2.7% at end-2025, lower than the 3.7% logged in the prior year.

Meanwhile, the Philippines’ debt stock climbed 7.3% to USD 147.651 billion by the end of 2025 from USD 137.628 billion at end-2024.

Of the total, USD 94.867 billion came from the public sector while USD 52.784 billion was from the private sector.

The BSP’s external debt data cover borrowings of Philippine residents from nonresident creditors, regardless of sector, maturity, creditor type, debt instruments or currency denomination.

The central bank gathers data on external debt through reports submitted by borrowers, banks, and major foreign creditors. — Katherine K. Chan