MANILA, Philippines — The country’s external debt service burden further declined in the first two months of 2025, dropping by 34.8 percent to $1.59 billion from $2.44 billion in the same period last year, preliminary Bangko Sentral ng Pilipinas data showed.
The BSP reported that the country’s total debt payments from January to February 2025 comprised $383 million in principal payments and $1.21 billion in interest payments.
This marks a sharp decrease in principal payments, which fell by 67.6 percent year-on-year from $1.18 billion in 2024. Interest payments were relatively steady, slightly declining by 4.2 percent from $1.26 billion in the previous year.
The lower debt service burden in early 2025 reflects a combination of factors, including a more favorable debt repayment schedule, possible refinancing strategies, and prudent external borrowing by the national government and private sector.
The external debt service burden refers to the total amount paid by the country to service its foreign debt, covering both principal amortization and interest payments. A reduced burden helps free up fiscal space and lessen pressure on the country’s international reserves.
Economic managers have consistently emphasized the importance of maintaining sustainable debt levels and a healthy debt servicing profile, especially amid global uncertainties and tighter financial conditions.
Latest data showed that the country’s foreign debt slipped slightly to $137.63 billion in end-December 2024 after hitting an all-time high of $139.64 billion in end-September, mainly due to the appreciation of the dollar against other currencies.
Public sector external debt slipped by 1.8 percent to $85.34 billion in end-December 2024 from $86.88 billion in end-September last year. Meanwhile, private sector debt declined slightly to $52.29 billion from $52.76 billion a quarter ago.
The national government borrows heavily from foreign and domestic creditors to finance the country’s budget deficit as it spends more than what it actually earns.
