The Philippines’ debt service burden reached $6.932 billion in the first half of 2024, reflecting an 8.74% decrease from $7.596 billion during the same period last year.
This external debt service data serves as a key indicator of debt sustainability, highlighting the country’s ability to meet current and future payment obligations without resorting to debt relief or extraordinary assistance.
Officials of the Bangko Sentral ng Pilipinas noted that when both the government and private sector engage in significant prepayments or repayments, the debt service burden tends to increase. Conversely, a decline in debt service occurs when there are no prepayments of loans or bond redemptions.
As of June 30, principal payments on the debt totaled $3.007 billion, down 28.91%. Most of these principal external debt services consist of fixed and revolving short-term liabilities. Interest payments also declined by 16.57% to $3.925 billion.
The debt service burden encompasses both principal and interest payments following any rescheduling. This includes payments related to fixed medium- to long-term credits, such as those from the International Monetary Fund and other loan facilities.
As of the end of June, the country’s outstanding external debt stood at $130.182 billion, a 10.4% increase from $117.918 billion in the same period of 2023.
Public sector external debt rose by 1.2% to $79.83 billion, representing 61.3% of total external debt. In contrast, private sector debt went up by 1.1% to $50.36 billion, accounting for 38.7% of total external debt.
According to the BSP, the external debt level remains manageable, with the external debt-to-GDP ratio at a prudent 28.9% as of June 30.
The debt service ratio (DSR), which assesses the adequacy of the country’s foreign exchange resources to meet maturing obligations, improved to 9.5%, down from 11.1% in the same period of 2023, due to lower debt service payments.
