The country’s outstanding external debt rose slightly to US$148.87 billion as of end-June 2025, a 1.5 percent increase from the previous quarter, largely due to the weaker US dollar, according to the Bangko Sentral ng Pilipinas (BSP).
The central bank attributed the increase primarily to valuation effects from the depreciation of the US dollar, which boosted the peso-equivalent of debt denominated in other foreign currencies by US$1.49 billion. Additional factors included the net acquisition of Philippine debt securities (US$660.96 million), while net repayments (US$315.67 million) provided a modest offset.
Despite the uptick, the BSP emphasized that the external debt-to-GDP ratio improved slightly to 31.2 percent, down from 31.5 percent in Q1, reflecting continued sustainability in the country’s debt position.
The BSP stressed this debt level represents the country’s commitment to its external financing obligations, which fund key infrastructure, social programs, and economic recovery initiatives. The national government’s bond issuances (US$5.83 billion) and external borrowing by local banks (US$3.44 billion) over the past year underpinned the 14.4 percent year-on-year increase in foreign debt.
At the same time, the country’s debt service ratio — a key measure of the ability to meet external obligations — improved to 8.7 percent, down from 9.8 percent a year earlier. This was due to lower principal and interest payments, suggesting better liquidity and fiscal space for future growth spending.
For ordinary Filipinos, the sustainability of external debt means continued investor confidence, stable access to foreign capital, and lower risks of economic shocks. A lower debt service ratio frees up resources for public services, education, and healthcare, while a strong reserve buffer shields the economy from external disruptions.
The gross international reserves (US$106 billion) remain robust, covering short-term external debt (US$28.63 billion) by 3.7 times — a ratio on par with emerging market peers, reaffirming the country’s resilience in a volatile global environment.
The BSP said that while the country’s external debt obligations have increased, they remain within manageable levels, ensuring that the Philippines maintains fiscal and economic stability as it navigates the global financial landscape.
