Philippines’ foreign debt service bill surged in January, BSP data show

By Aaron Michael C. Sy, Reporter

THE PHILIPPINES’ external debt service burden surged in January due to a spike in principal payments as obligations matured, preliminary central bank data showed.

The country’s debt service bill for foreign loans jumped by 81.11% to $1.505 billion in the first month of the year from $831 million in January 2025, according to data on the Bangko Sentral ng Pilipinas’ (BSP) website.

Broken down, principal payments ballooned by 763.64% year on year to $769 million in January from $88 million previously.

Meanwhile, interest payments inched up by 0.27% to $745 million from $743 million a year earlier.

External debt service burden is made up of principal and interest payments on fixed medium- and long-term credits, including International Monetary Fund credits and new money facilities, as well as interest payments on fixed and revolving short-term liabilities of banks and nonbanks.

The data exclude prepayments on future years’ maturities of foreign loans and principal payments on fixed and revolving short-term liabilities of banks and nonbanks.

The increase in the Philippines’ external debt service bill in January was likely due to higher interest costs due to the elevated global rates, as well as some refinancing or liability management activities, Philippine Institute for Development Studies Senior Research Fellow John Paolo R. Rivera said in a Viber message.

The large volume of maturing foreign obligations likely resulted in higher debt payments, with the National Government’s wider budget deficits in recent years since the coronavirus pandemic also leading to more external borrowings, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

“The higher US dollar-peso exchange rate also led to higher peso equivalent of foreign currency debt principal and interest payments,” he said.

The peso traded at the P58-to-P59 levels against the greenback in January this year versus the P57-P58 range in the same month in 2025.

Moving forward, he said the country’s debt service bill may continue to rise as some of its foreign obligations fall due in the coming months, including $112 million in global bonds maturing in August as well as other official development assistance and multilateral loans.

“Still elevated US dollar-peso exchange rate near the P60 levels would increase the peso equivalent of foreign debt principal and interest payments,” Mr. Ricafort said.

Since the US and Israel began attacks on Iran on Feb. 28, the peso has weakened to breach the P60-per-dollar level, even hitting a new record low of P60.748 on March 31.

“External debt servicing is expected to remain elevated but manageable, aligned with the government’s repayment schedule. While higher global interest rates may keep costs up, these are planned obligations, and the Philippines still maintains adequate buffers such as reserves and stable forex (foreign exchange) inflows to meet them without major stress,” Mr. Rivera added.

As of end-2025, the debt service burden as a share of gross domestic product stood at 30.3%, up from 29.8% in the prior year, preliminary BSP data also showed.

Meanwhile, the Philippines’ total external debt rose by 7.28% to $147.651 billion at end-2025 from $137.628 billion in 2024.

Of this, $94.867 billion was public sector debt while $52.784 billion came 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.