Debt servicing climbs to $2.1 billion in 2 months

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May 26, 2026 | 12:00am

MANILA, Philippines — The country’s external debt service burden (DSB) soared by nearly 32 percent in the first two months of 2026, driven largely by a sharp increase in principal payments, preliminary data from the Bangko Sentral ng Pilipinas showed.

From January to February, the Philippines’ debt service bill for foreign loans climbed to $2.13 billion, up from $1.62 billion in the same period a year ago.

The increase was largely traced to a more than two-fold jump in principal repayments, which hit $884 million from $386 million in the same period of 2025.

Interest payments were broadly flat at $1.24 billion as of end-February, inching up by 0.9 percent annually from $1.23 billion.

The external DSB represents total principal and interest payments on the country’s external obligations, or the amount the Philippines needs to pay to foreign creditors over a given period to service its outstanding debt.

As of the end of February, the ratio of DSB to export shipments stood at 17.5 percent, up from 15.7 percent a year ago.

Likewise, the ratio of DSB to exports of goods and receipts from services and primary income increased to 7.8 percent from 6.3 percent.

On the other hand, external earnings posted gains. Export shipments went up to $12.16 billion in the first two months of the year, from $10.32 billion in the same period last year.

Total exports of goods and receipts from services and primary income rose to $27.43 billion from $25.53 billion, while current account receipts edged up to $28.71 billion from $26.81 billion.

‘Not a red flag yet’

The sharp 31.5-percent jump in the country’s external debt service burden early this year is “less about a sudden deterioration and more about timing and structure,” Jonathan Ravelas, senior adviser at Reyes Tacandong & Co., said.

Ravelas said the increase is not yet a red flag but a reminder for the government to “continue lengthening debt maturities, diversifying funding sources and strengthening dollar inflows.”

He also noted the 129-percent surge in principal payments, which according to him suggests maturities are clustering or more obligations simply fell due, rather than reflecting improper borrowing.

The flat growth of interest payments indicates that borrowing costs are stabilizing despite the high global rate environment, he added.

“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,” Ravelas said.