Philippine external debt rises to USD 154.93 billion

MANILA — The Philippines’ outstanding external debt climbed to USD 154.93 billion at end-June 2026 from USD 147.35 billion three months earlier, although the country retained sufficient foreign-exchange buffers to meet near-term obligations, the Bangko Sentral ng Pilipinas said.

External debt rose to 31.6% of gross domestic product from 30% in the previous quarter as foreign obligations expanded faster than economic output, according to the BSP’s Sept. 11 report.

The increase puts greater focus on the country’s capacity to service foreign obligations without putting excessive pressure on international reserves, government resources, or foreign-exchange availability. For households and businesses, the relevant risk is that a sustained rise in external debt could leave the economy more exposed to exchange-rate swings and external financial shocks, but the BSP’s liquidity and solvency indicators show that repayment capacity remained adequate at the end of the second quarter.

External debt refers to borrowings owed by Philippine residents to nonresidents.

The country’s short-term external debt based on remaining maturity rose to USD 31.64 billion, but it was covered more than three times by gross international reserves of USD 104.74 billion.

That placed the ratio of GIR to short-term debt based on remaining maturity, or STRM, at 3.31, meaning reserves were sufficient to cover obligations falling due over the succeeding 12 months more than three times over.

STRM consists of loans with original maturities of one year or less, as well as amortizations on medium- and long-term accounts falling due within the next 12 months.

The BSP said Philippine reserve coverage remained robust compared with other emerging-market economies based on the latest comparable data.

At end-March 2026, the Philippines had a GIR-to-STRM ratio of 4.05, according to the central bank’s peer-comparison basis.

The debt service ratio, meanwhile, eased to 9% from 9.2% in the same period a year earlier, indicating that the country’s foreign-exchange earnings remained adequate to meet principal and interest payments on external debt.

The debt service ratio measures principal and interest payments against receipts from exports of goods and services and primary income, or XGSI.

A lower debt service ratio is generally favorable because a smaller portion of the country’s foreign-exchange earnings is required for debt repayment, leaving more resources available for economic activity and strengthening buffers against external shocks.

The quarter-on-quarter increase in external debt was driven mainly by net borrowing by the national government and private domestic banks, the BSP said.

The increase was partly tempered by negative foreign-exchange revaluation effects caused by the appreciation of the U.S. dollar and by a modest decline in nonresident holdings of Philippine debt securities.

Compared with a year earlier, external debt also increased from USD 148.87 billion at end-June 2025.

The BSP attributed the year-on-year increase primarily to national government global bond issuances and loan availments used for budgetary and development financing.

The central bank said the overall external debt position remained broadly manageable because of sound solvency indicators and adequate liquidity buffers.