Foreign debt service burden soars to $1.5 billion

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April 22, 2026 | 12:00am

MANILA, Philippines — The country’s external debt service burden (DSB) surged at the start of the year, driven largely by a sharp increase in principal payments, latest data from the Bangko Sentral ng Pilipinas (BSP) showed.

In January, the country’s foreign debt service burden surged by 81 percent to $1.51 billion, almost double the $831 million recorded in the same month last year.

The increase was mainly due to a spike in principal repayments, which zoomed to $760 million from just $88 million a year earlier. Interest payments were broadly steady at $745 million, slightly higher than $743 million in the same month last year.

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.

Despite steady growth in external earnings, debt-servicing ratios deteriorated during the month, indicating a heavier burden relative to income sources.

The ratio of DSB to export shipments rose to 26.5 percent in January from 16.8 percent a year ago. Likewise, the DSB to exports of goods and receipts from services and primary income increased to 11.2 percent from 6.5 percent.

Similarly, the DSB to current account receipts climbed to 10.7 percent from 6.1 percent, suggesting that a larger share of the country’s foreign exchange inflows was used to service external debt.

External earnings posted modest gains. Export shipments increased to $5.67 billion in January from $4.93 billion a year earlier.

Meanwhile, total exports of goods and receipts from services and primary income rose to $13.42 billion from $12.88 billion, while current account receipts edged up to $14.08 billion from $13.54 billion.

John Paolo Rivera, senior research fellow at the Philippine Institute for Development Studies, said the uptick in debt servicing was likely driven by scheduled principal and interest payments on foreign loans, alongside higher borrowing costs.

“It may also reflect higher interest costs due to the elevated global rate environment and some refinancing or liability management activities,” Rivera said.

He added that external debt servicing is expected to remain elevated but manageable, in line 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 inflows to meet them without major stress,” Rivera said.

The BSP uses these indicators to assess the country’s capacity to meet its external debt obligations, with higher ratios signaling increased pressure on foreign exchange resources.