Foreign debt service burden drops to $12B
THE country’s external debt service burden fell by 22.8 percent to $12.01 billion as of end-November from $15.57 billion a year earlier, preliminary Bangko Sentral ng Pilipinas (BSP) data showed.Principal payments declined to $4.77 billion from $8.21 billion while interest payments also dropped to $7.25 billion from $7.37 billion.Outstanding external debt stood at $149.09 billion as of end-September, up 6.7 percent from $139.64 billion in the previous quarter.As a share of gross domestic product, external debt slightly rose to 30.9 percent, slightly higher from 30.6 percent three months earlier.Public sector external debt totaled $96.29 billion, up from $86.88 billion as of end-June, while private sector debt also increased to $52.79 billion from $52.76 billion.The central bank said external debt “remained manageable, supported by solid economic conditions and prudent policies.”The debt service burden — a measure of the country’s ability to pay its debt — covers principal and interest payments on medium- to long-term credits such as those from the International Monetary Fund, loans under Paris Club agreements and debt restructuring by commercial banks, along with new money facilities.It also includes interest payments on banks’ and nonbanks’ fixed and revolving short-term liabilities but excludes prepayments for future foreign loan maturities and principal payments on short-term obligations.Sought for comment, Rizal Commercial Banking Corp. chief economist Michael Ricafort said the decline was due to a lower share of foreign borrowings in the government’s total borrowing mix to better manage the risk of foreign exchange losses.The government, which has prioritized local borrowings, has set a mix of 77 percent domestic borrowings and 23 percent foreign for 2026.It is planning to borrow P2.68 trillion this year to finance its programs and projects, slightly up from the P2.6 trillion last year.Most will come from the domestic debt market at P2.05 trillion, lower than the P2.11 trillion programmed for 2025.The remaining P627.1 billion will come from external sources, up from 2025’s P488.17 billion. This comprises program loans (P263.3 billion), project loans (P61.7 billion), and bonds and other inflows (P302.1 billion).
2026-02-23 16:19:00