Debt service burden goes up to $17.16 billion

MANILA, Philippines — The country’s external debt service burden reached $17.16 billion in 2024, 18 percent higher than the $14.85 billion in 2023, according to latest data from the Bangko Sentral ng Pilipinas (BSP).

The debt service burden followed a steady rise in debt payments over the past few years, from $7.53 billion in 2020 to $9.12 billion in 2021 and $8.48 billion in 2022.

The increase in 2024 can be attributed to growing obligations on both principal and interest payments.

Last year, principal repayments rose by 15.2 percent to $8.94 billion from $7.76 billion a year ago. Interest payments also went up by 15.8 percent to $8.22 billion in 2024 from $7.1 billion in 2023.

The external debt service burden refers to the payments a country makes on its external debt, specifically covering both principal repayments and interest payments. It represents actual debt service obligations that have been paid within a given period.

It consists of principal and interest payments on fixed medium and long-term credits, including International Monetary Fund credits, loans covered by the Paris Club and commercial banks’ rescheduling and new money facilities.

It also includes interest payments on fixed and revolving short-term liabilities of banks and non-banks, excluding prepayments on future years’ maturities of foreign loans and principal payments on fixed and revolving short-term liabilities of banks and non-banks.

Latest data from the central bank showed that the country’s foreign debt slipped slightly to $137.63 billion in end-December 2024 after hitting an all-time high of $139.64 billion in end-September, mainly due to the appreciation of the dollar against other currencies.

Public sector external debt slipped by 1.8 percent to $85.34 billion in end-December 2024 from $86.88 billion in end-September last year. Meanwhile, private sector debt declined slightly to $52.29 billion from $52.76 billion a quarter ago.

The national government borrows heavily from foreign and domestic creditors to finance the country’s budget deficit as it spends more than what it actually earns.