Debt service burden slides 23% to $11 billion

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January 20, 2026 | 12:00am

MANILA, Philippines — The Philippines’ external debt service burden (DSB)fell by nearly 23 percent to $11.02 billion from January to October last year compared to $14.3 billion in 2024, according to the latest data from the Bangko Sentral ng Pilipinas (BSP).

Of the total, interest payments dipped by 2.1 percent to $6.51 billion from $6.65 billion, while principal payments slumped by 41 percent to $4.51 billion from $7.65 billion.

The debt service burden remained within manageable levels relative to the country’s external receipts. From January to October 2025, the DSB accounted for 20.7 percent of export shipments and 8.4 percent of exports of goods, services and primary income.

The DSB refers to the combined principal and interest payments made by the country to settle its foreign loans. These include amortizations on medium- to long-term borrowings as well as interest on short-term credit lines obtained from foreign creditors.

Rizal Commercial Banking Corp. chief economist Michael Ricafort said that the decline in the country’s debt service burden was due to lower foreign debt maturities and the lower share of foreign borrowings to better manage foreign exchange risks.

“Going forward, risk of forex losses would still lead to a tempered approach in increasing foreign borrowings to finance the country’s budget deficit,” Ricafort said.

The country’s outstanding external debt climbed to a fresh record high of $149.09 billion as of end-September last year, but the BSP earlier said that foreign debt remains sustainable with key indicators showing manageable levels.

The latest figure was slightly higher than the previous quarter’s $148.87 billion, underpinned by heightened engagement of non-resident investors in the domestic capital markets.

The level was equivalent to 30.9 percent of the country’s gross domestic product, an improvement from the 31.2 percent recorded in the previous quarter.

The Philippines borrows externally to finance public infrastructure, social services and other development programs, as well as to diversify funding sources and take advantage of favorable terms from foreign lenders.

Local banks and companies also tap offshore markets to fund expansion and investment needs.