Debt service eases 23% to $12 billion in 11 months

Upgrade to High-Speed Internet for only ₱1499/month!

Enjoy up to 100 Mbps fiber broadband, perfect for browsing, streaming, and gaming.

Visit Suniway.ph to learn

February 24, 2026 | 12:00am

MANILA, Philippines — The country’s external debt service burden fell by 22.8 percent to $12.02 billion from January to November last year compared to $15.57 billion in the same period in 2024 amid lower principal maturities and easing global interest rates.

Data from the Bangko Sentral ng Pilipinas (BSP) showed that principal payments slumped by 41.9 percent to $4.77 billion during the 11-month period in 2025 from $8.21 billion a year ago.

Likewise, interest payments slipped by 1.6 percent to $7.25 billion from $7.37 billion.

The external debt service burden refers to the amount of money a country needs to pay back for the loans it has taken from other countries or organizations abroad. It represents principal and interest payments after rescheduling.

The debt service burden remained within manageable levels relative to the country’s external receipts. From January to November last year, the DSB accounted for 20.7 percent of export shipments and 8.3 percent of exports of goods, services and primary income.

Rizal Commercial Banking Corp. chief economist Michael Ricafort said the decline was largely due to lower foreign debt maturities, particularly principal payments, compared to year-ago levels.

Ricafort added that the national government’s reduced reliance on foreign borrowings as part of its overall funding mix also helped manage foreign exchange risks and temper debt servicing costs.

Ricafort likewise cited the US Federal Reserve’s cumulative 175-basis-point rate cuts since September 2024, which helped ease interest payments on foreign debt.

“For the coming months, lower foreign borrowings in the total borrowing mix of the national government to reduce forex risk, together with possible further Fed rate cuts, could further reduce the foreign debt servicing bill,” 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. It 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.