Foreign debt payments decline 6.2% in first half

Driven by decreases in both principal and interest payments, the Philippines' external debt service burden (DSB) declined to $6.72 billion by the end of the first semester, from $7.16 billion in the same period in 2024.

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Data from the Bangko Sentral ng Pilipinas (BSP) showed that the 6.2-percent drop in the country's servicing of its foreign debt was driven by a 13.2-percent decrease in principal payments to $2.77 billion from $3.19 billion.

Alongside this was the 0.8 percent decline in interest payments to $3.95 billion, from $3.98 billion as of the end of June last year.

According to Michael Ricafort, chief economist at Rizal Commercial Banking Corp., the overall drop in foreign DSB could be attributed to the government's strategy of borrowing less from external sources in recent years. This strategy mitigates the risks associated with foreign exchange movements.

Notably, debt sourced externally primarily stems from the need to fund the government's budget deficit.