Philippines external debt eases in Q4 – BSP

The Philippines’ outstanding external debt declined slightly in the fourth quarter of 2025, while key indicators of debt sustainability improved, according to the Bangko Sentral ng Pilipinas (BSP).

In a recent advisory, external debt fell 1.0 percent to $147.65 billion as of end-December 2025, from $149.09 billion in September, mainly due to net selling of Philippine debt securities by non-resident investors.

The BSP said non-residents sold a net $2.28 billion worth of Philippine debt instruments, which pulled down the country’s external debt stock during the quarter. The decline was also supported by valuation adjustments amounting to $659.38 million, reflecting the lower U.S. dollar value of borrowings denominated in other currencies.

These factors partly offset net external borrowings totaling $1.44 billion during the period.

As a result, the country’s external debt-to-gross domestic product ratio improved slightly to 30.3 percent, from 30.9 percent in the previous quarter, indicating modest gains in debt manageability despite slower economic growth and cautious global market conditions.

Short-term external debt based on the remaining maturity concept—which includes loans maturing within the next 12 months—rose to $26.80 billion from $26.36 billion in the previous quarter.

However, the BSP said the country maintains adequate financial buffers to meet near-term obligations. The Philippines’ gross international reserves stood at $110.83 billion, providing 4.14 times cover for short-term external debt, a level considered strong compared with many emerging economies.

Another key indicator, the debt service ratio, improved significantly to 8.3 percent, from 11.5 percent a year earlier, reflecting lower principal and interest payments relative to the country’s foreign exchange earnings from exports and other inflows.

On a year-on-year basis, however, external debt rose 7.3 percent, driven largely by fresh borrowings from both the public and private sectors.

These included $3.29 billion in bond issuances by the national government and $3.72 billion in external financing tapped by private banks, as well as valuation adjustments and renewed foreign investor interest in Philippine debt securities.

Meanwhile, the Bureau of the Treasury (BTr) recently reported the national government’s total debt reached P18.13 trillion as of end-January 2026, a new record high, up P426.15 billion from the previous month, as authorities front-loaded borrowings to secure favorable financing terms amid global market uncertainties.

Of the total, domestic debt accounted for about 68 percent of the government’s debt portfolio, helping limit exposure to foreign exchange risks, while external obligations represented about 32 percent.

The Treasury said the increase in external borrowings was partly due to the issuance of new global bonds and official development assistance loans, which together added about P191.02 billion to the government’s external debt stock.

The government described the move as a strategic effort to secure financing early and take advantage of favorable market conditions, while maintaining a stable and sustainable debt portfolio.

External debt refers to borrowings owed by Philippine residents—including the national government, banks and private firms—to non-residents, and is closely monitored as an indicator of the country’s capacity to meet foreign obligations while maintaining financial stability.