Foreign debt rises to record S149 billion in September

MANILA, Philippines, December 15 ------ The national government’s outstanding external debt reached a new record high of $149.09 billion as of end-September, following the stronger participation of foreign investors in local capital markets.

Based on data from the Bangko Sentral ng Pilipinas, the latest figure was less than one percent higher than the previous quarter’s $148.87 billion. “The Philippines’ outstanding external debt remained broadly stable in the third quarter of 2025. The marginal quarter-on-quarter increase was underpinned by heightened engagement of non-resident investors in the domestic capital markets,” the BSP said.

The net acquisition of Philippine debt securities by non-residents totaled $1.47 billion, but this was offset by net repayments during the period. “The external debt growth was tempered by net repayments amounting to $764.56 million and valuation adjustments amounting to $442.5 million due to the US dollar appreciation during the reference quarter,” the central bank said.

Despite reaching record level, the external debt-to-gross domestic product ratio eased to 30.9 percent from 31.2 percent in the second quarter, indicating an improved debt position relative to the overall size of the economy. The country taps external borrowings to support infrastructure projects, social services and development initiatives, while broadening its funding base and benefiting from the terms provided by overseas lenders.

Local banks and corporations likewise raise funds from offshore markets to support their expansion plans and investment requirements. Short-term external debt based on the remaining maturity stood at $27.16 billion, which is well covered by the country’s gross international reserves of $109.06 billion, translating to a four times cover. For the debt service ratio, it improved to 8.5 percent in the third quarter from 11.5 percent a year ago, primarily due to lower principal and interest payments by resident borrowers during the period.

The ratio serves as another measure of debt-servicing capacity by gauging how a country’s loan payments compare with earnings from exports and other external inflows. External debt increased by 6.8 percent on a year-on-year basis, driven by new borrowings that included $3.33 billion in bond issuances by the national government and $1.58 billion in external financing tapped by local banks.

Source: philstar.com