BSP-approved foreign borrowings drop 71% in Q3 2025

Foreign borrowings by the Philippine public sector approved by the Bangko Sentral ng Pilipinas (BSP) declined sharply in the third quarter of 2025, falling by 71.13% year-on-year.

The BSP’s Monetary Board gave the green light to USD 1.10 billion worth of proposed borrowings during the quarter, significantly lower than the USD 3.81 billion approved during the same period in 2024.

The approved borrowings consist of two medium- to long-term loans intended for social protection-related projects.

These types of loans have maturities of more than one year and are typically used to fund development initiatives such as education, healthcare, and poverty alleviation.

From January to September 2025, total BSP-approved public sector foreign borrowings reached USD 12.28 billion.

The BSP emphasized that prior approval of all foreign loans proposed by the National Government, its agencies, and government financial institutions—as well as loans guaranteed by the state—is required under Philippine law.

This policy is grounded in Section 20, Article VII of the 1987 Constitution and Letter of Instructions No. 158 issued on January 21, 1974.

According to the BSP, this approval process ensures that the country’s external debt remains at sustainable levels and aligned with national development priorities.

The steep decline in Q3 borrowings may reflect tighter borrowing strategies, improved fiscal management, or a delay in the rollout of certain foreign-assisted projects.

It also comes amid continued global economic uncertainty, elevated interest rates, and volatile capital markets.

The central bank’s oversight of foreign debt aims to protect the country’s macroeconomic stability and avoid excessive exposure to external financial risks.

As of the first half of 2025, the Philippines’ outstanding external debt stood at USD 118.8 billion, or 28.5% of gross domestic product, according to BSP data.

This is well within internationally accepted debt sustainability thresholds, allowing the country to maintain favorable credit ratings.

Foreign borrowings are often used to finance infrastructure, social services, and climate-resilient programs under the government’s medium-term development plan.

Moving forward, analysts will be watching if the downtrend in public foreign debt approvals continues, especially in light of the Marcos administration’s push for fiscal discipline and increased use of domestic financing options.