THE external debt service bill fell 34.9% in the first two months following a sharp decline in principal payments, the central bank said, citing preliminary data.
Debt service on external borrowing was $1.59 billion in the period, against $2.44 billion a year earlier.
Amortization payments fell 67.6% year on year to $383 million.
Interest payments dropped 4.2% to $1.21 billion.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the slump in debt servicing was due to the lower amount of matured external debt that needed to be repaid compared to a year earlier.
“This could have also been a function of lower amounts of foreign debt in the NG total borrowing mix in recent years (to minimize) foreign exchange risk involved in foreign borrowing,” he added.
Between this year and 2027, the National Government (NG) plans to source at least 80% of its borrowing from domestic sources. The government previously had a 75:25 borrowing mix.
The Treasury reported that NG gross borrowing fell 7.15% to P192.45 billion in March, with gross external debt declining 31.9% to P34.65 billion.
The debt service bill represents principal and interest payments after rescheduling, according to the Banko Sentral ng Pilipinas (BSP).
This includes principal and interest payments on fixed medium- and long-term credits including International Monetary Fund credits, loans covered by the Paris Club and commercial banks’ rescheduling, and New Money Facilities.
It also covers interest payments on fixed and revolving short-term liabilities of banks and nonbanks.
The debt service data exclude prepayments on future years’ maturities of foreign loans and principal payments on fixed and revolving short-term liabilities of banks and nonbanks.
Outstanding external debt rose 9.8% to $137.63 billion in 2024.
This brought the external debt-to-gross domestic product (GDP) ratio to 29.8% at the end of 2024 from 28.7% at end-2023.
At the end of 2024, the external debt service burden as a share of GDP was 3.7%, up from 3.4% at the end of 2023.
The BSP’s external debt data cover borrowings of Philippine residents from nonresident creditors, regardless of sector, maturity, creditor type, debt instruments or currency denomination. — Luisa Maria Jacinta C. Jocson