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THE PHILIPPINES’ remarkable external debt surged to an unprecedented $148.87 billion as of end-June amid the decline of the US dollar, according to the Bangko Sentral ng Pilipinas (BSP).
Data from the central bank indicated that the nation’s external debt increased by 14.4% from $130.318 billion during the same timeframe last year.
“The growth in external debt was chiefly influenced by borrowings, which encompassed bond issues by the National Government totaling $5.83 billion and external funding accessed by local banks amounting to $3.44 billion,” stated the BSP in a report.
Quarter-over-quarter, external debt edged up by 1.5% from the $146.74 billion recorded at the conclusion of the first quarter.
“The rise in external debt for Q2 (second quarter) 2025 was mainly attributed to valuation impacts resulting from the depreciation of the US dollar,” the BSP noted.
External debt encompasses all borrowings by residents from non-residents.
The BSP remarked that the external debt level remained “sustainable,” representing 31.2% of gross domestic product. This was an improvement from the 31.5% in the preceding quarter but higher than the 28.9% a year earlier.
The central bank pointed out that the weaker dollar raised the US dollar equivalent of borrowings denominated in other currencies by $1.49 billion.
During the April-to-June timeframe, the peso displayed robust performance against the dollar, trading within the P55 to P56 range, averaging P56.581 as of end-June.
“The net acquisition of Philippine debt securities amounting to $660.96 million also added to the rise (in external debt), while net repayments totaling $315.67 million partially moderated the growth in the nation’s external debt,” the BSP elaborated.
Most of the nation’s public sector liabilities, totaling $88.371 billion, were sourced from the National Government, whereas the remainder originated from the BSP ($3.919 billion) and government-owned banks ($1.81 billion).
Japan remained the Philippines’ leading creditor with loans amounting to $15.599 billion, trailed by the United Kingdom with $6.358 billion and Singapore with $4.837 billion.
The borrowing composition was primarily made up of US dollar-denominated debt, followed by debt in Philippine pesos and Japanese yen.
As of the second quarter, the country’s short-term external debt, based on the remaining maturity method (STRM), stood at $28.63 billion. STRM debt consists of loans with original maturities of one year or less alongside amortization on medium and long-term accounts maturing within the upcoming 12 months.
“This magnitude remains well-supported by the nation’s gross international reserves (GIR) of $106 billion, providing a coverage ratio of 3.7 times for short-term liabilities,” the BSP highlighted.
“The nation’s GIR-to-STRM debt ratio is still on par with its emerging market counterparts.”
Meanwhile, the BSP indicated that the decline in principal and interest payments by resident borrowers reduced the debt service ratio to 8.7% during the period, down from 9.8% a year prior. This ratio assesses a nation’s ability to fulfill its obligations based on its foreign exchange earnings.
“This decline was due to reduced principal and interest payments by resident borrowers as of the second quarter of 2025,” it added.
BSP data revealed that the public sector’s external debt rose by 88.2% to $94.801 billion at end-June compared to $50.36 billion the previous year.
In contrast, private sector liabilities fell by 32.3% year-on-year to $54.072 billion from $79.83 billion a year earlier. — Katherine K. Chan
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