The Philippines’ external debt service burden dropped significantly to $799 million in January 2025, nearly half the $1.75 billion paid in the same month last year, according to data from the Bangko Sentral ng Pilipinas (BSP).
Of the total amount, interest payments rose slightly by 3.8% to $719 million. However, principal payments plummeted by 92.5%, amounting to just $79 million—far lower than the $1.06 billion recorded a year earlier.
Michael Ricafort, chief economist at Rizal Commercial Banking Corp. (RCBC), explained that the notable decline is “largely attributed to a lower amount of external debt maturity or principal payments at the start of the year, compared to the same month last year.”
He noted that this trend reflects a deliberate shift in strategy by the government. “This shows the government’s efforts in recent years to reduce the share of external borrowings in the total borrowing mix to minimize foreign exchange risks entailed in foreign debt,” Ricafort added.
He also linked the drop to a familiar budgetary cycle. “This is also partly consistent with the budget surplus at the start of the year, following the seasonal increase in the budget deficit and debt payments toward yearend – a consistent pattern seen in recent years that tends to slow down upon crossing into the new year,” he said.
The external debt service burden includes both principal and interest payments on medium and long-term loans from various sources, including international financial institutions and bilateral lenders.