Outstanding external debt jumped by 14 percent to $146.74 billion in the first quarter of the year, compared to the level in the same quarter of 2024 due to the government’s higher spending on infrastructure projects and banks’ increased foreign loans.

The Bangko Sentral ng Pilipinas (BSP) reported that the new growth was also slightly higher, at 6.6 percent, than the level in the fourth quarter of 2024.

BSP said the higher debt accounted for 31.5 percent of the country’s gross domestic product, rising from 29.8 percent in the last three months of the previous year.

“But this still reflects the country’s ability to repay its external obligations,” the Central Bank said.

BSP said the national government registered a total bond issuance of $7.83 billion year-on-year to foreign investors, which included $5.06 billion in global bonds and loans from foreign development institutions.

Infra funding from loans

“The increase in external debt in the first quarter was primarily attributed to the national government’s fund-raising activity meant to support infrastructure projects and other budgetary requirements,” BSP said.

Meanwhile, local banks borrowed a total of $6.14 billion from offshore investors to sustain liquidity, operations, and short-term financing for various projects.

The country’s short-term external debt based on the remaining maturity concept hit $32.67 billion.

These loans included those that carried maturities of one year or less plus amortizations on medium- and long-term accounts falling due within the next 12 months.

BSP said the country’s $106.67-billion gross international reserves remains sufficient to provide 3.27 times cover for short-term loans.

Despite the higher outstanding external debt, BSP said the country paid less principal and interest, translating into a lower debt service ratio of 8.4 percent from 9 percent.

This ratio compares the country’s loan payments with its income from exports and other cash inflows.

The figure came after the peso strengthened against the US dollar by 4.46 percent in one year, according to the Bankers Association of the Philippines.

The Institute of International Finance (IIF) said the US dollar might remain relatively weak as business sentiment in the US has turned gloomier due to Trump’s tariffs and anti-immigration policies.

“US growth sharply decelerates, with fiscal expansion and tariff uncertainty shaping sentiment. The US is expected to grow by only 0.3 percent in the fourth quarter this year compared to the same quarter of 2024,” IIF said.