The Bangko Sentral ng Pilipinas (BSP) said the country’s external debt service burden for 2024 increased by 15.5 percent or $2.3 billion from the 2023 level.
The latest BSP data released on Friday showed the debt service burden rose to $17.16 billion last year from $14.85 billion in 2023. An analyst on Sunday described this level as “significant,” owing to high interest rates and currency fluctuations.
The external debt service ratio, expressed as a percentage of gross domestic product (GDP), reached 3.7 percent in 2024 or slightly higher than 3.4 percent in 2023.
Of the total debt service, 52 percent, or $8.94 billion, was in principal payments, while the remaining 48 percent, or $8.2 billion, came from interest payments.
In 2024, principal payments were 15.3 percent higher than the $7.46 billion in 2023. Interest payments, meanwhile, rose 15.8 percent from $7.09 billion.
The BSP said external debt service refers to the country’s total amount to pay for loans taken from foreign lenders, including principal and interest payments.
In 2024, the country’s total external debt, or borrowings owed by residents to non-residents, stood at $137.63 billion, 9.8 percent higher than the full-year 2023 amount of $125.39 billion.
The debt ratio in 2024 was 29.8 percent higher than the previous year’s 28.7 percent.
On Sunday, Jonathan Ravelas, BDO lead strategist, said the increased amount of external debt service burden was “indeed significant” and attributable to higher interest rates, increased borrowing, or currency fluctuations.”
Michael Ricafort, RCBC chief economist, pointed to large amounts of borrowings since the pandemic have started to mature.
“However, the country’s external debts are mostly medium- to long-term, thereby making debt servicing more manageable,” Ricafort said on Sunday.
He said the weaker peso exchange rate with the US dollar since 2022 also “partly contributed to the higher peso equivalent of foreign debts.”
“Foreign debts entail forex risks that needed to be managed as well while providing liquid benchmarks in the international bond market,” Ricafort added.
The BSP also reported that as of December 2024, the maturity profile of the country’s external debt remained predominantly medium-to-long term (MLT).
Under the remaining maturity concept, outstanding MLT borrowings stood at $109.72 billion, with its equivalent share total at 79.7 percent.
Outstanding short-term debt, meanwhile, comprised 20.3 percent or $27.91 billion of the total outstanding external IOUs.
Regarding the currency mix, the BSP said the country’s debt stock remained largely denominated in US dollars, valued at $101.79 billion and covering 74.0 percent of the total.
This was followed by Philippine peso debt equivalent to $12.68 billion or 9.2 percent of the total.
Japanese yen loans came in third, at $10.33 billion or 7.5 percent of the total.
The rest, amounting to $12.82 billion or 9.3 percent of the total, pertained to 12 other currencies, including the euro and Special Drawing Rights from multilateral lenders.
Ravelas and Ricafort said the BSP’s external debt computation differs from the total borrowings the Bureau of the Treasury (BTr) recorded.
“The report of the BTr is national government data, not BSP’s,” Ricafort said.
Ravelas, meanwhile, explained that the BSP’s report typically includes all external debt, covering both public and private sector borrowings. In contrast, the BTr focuses primarily on the national government’s external debt.
He said the BSP gathers data from various financial institutions, including banks and corporations, while the BTr’s data is sourced from government transactions and obligations.
“The difference in accounting and reporting standards can lead to variations in how debt figures are presented. The BSP may use international standards for external debt reporting, while the BTr follows government accounting practices,” Ravelas said.
“These differences can result in variations in the reported figures, but both reports are essential for understanding the country’s overall debt situation,” Ravelas added.
