THE Philippines’ outstanding external debt, or borrowings owed by residents to non-residents, increased in the first quarter of the year due to borrowings by the national government and the banking sector.
The external debt reached US$146.74 billion at the end of March 2025, representing a 6.6 percent increase from the previous quarter and a 14.0 percent increase from the first quarter of the previous year.
The latest external debt figure was equivalent to 31.5 percent of the country’s gross domestic product. This was higher than the 29.8 percent in the previous quarter but still reflects the country’s ability to repay its external obligations.
As of March 2025, the country’s short-term (ST) external debt based on the remaining maturity concept[1]/ stood at US$32.67 billion. This level remains well-covered by the country’s gross international reserves (GIR), which amounted to US$106.67 billion, providing 3.27 times cover for short-term obligations. The country's GIR level continues to provide a robust external liquidity buffer, despite the downward trend of the short-term external debt cover in recent years.
Meanwhile, the debt service ratio[2]/, another indicator of capacity to service debt that compares the country’s loan payments with its income from exports and other inflows, declined to 8.4 percent from 9.0 percent a year earlier. This reflected lower principal and interest payments by resident borrowers in the first quarter of 2025.
The increase in external debt in the first quarter was primarily attributed to the national government’s fund-raising activity meant to support infrastructure projects and other budgetary requirements. The national government raised US$5.06 billion from the issuance of global bonds and loans extended by foreign development institutions.
In addition, local banks accessed offshore markets in the same period for short-term financing to support trading operations and address liquidity needs.
On year-on-year terms, the increase in the external debt was also driven primarily by bond issuances by the national government, which totaled US$7.83 billion, and borrowings by local banks amounting to US$6.14 billion. PR