THE PHILIPPINES’ external debt service burden increased by an annual 17% as of end-September due to a rise in both interest and principal payments, preliminary data from the Bangko Sentral ng Pilipinas (BSP) showed.
Debt servicing on external borrowings climbed by 16.8% to $12.85 billion in the first nine months from $11 billion in the same period a year ago.
BSP data showed principal payments went up by 16.8% to $6.925 billion as of end-September from $5.928 billion in the previous year.
Interest payments likewise increased by 16.8% year on year to $5.925 billion from $5.072 billion.
At end-September, the external debt service burden as a share of gross domestic product (GDP) rose to 3.9% from 3.5% a year prior.
Separate data from the BSP showed the Philippines’ outstanding external debt hit a record $139.64 billion as of end-September, higher by 17.5% year on year.
This brought the external debt-to-GDP ratio to 30.6%, up from 28.9% in the previous quarter.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the rise in external debt payments was due to an increase in matured foreign debt in the previous months, which led to higher servicing.
“More foreign borrowings especially since the COVID (coronavirus disease 2019) pandemic led to some increase in external debt maturities in recent months as being felt recently,” he added.
Mr. Ricafort also noted relatively higher interest payments amid still-elevated interest rates as the US Federal Reserve only began its easing cycle in late September.
The US central bank kicked off its rate-cutting cycle in September with a larger-than-expected half-percentage-point reduction. The Fed aggressively hiked rates from 2022 to 2023 to tame soaring inflation.
The BSP’s external debt data cover borrowings of Philippine residents from nonresident creditors, regardless of sector, maturity, creditor type, debt instruments or currency denomination. — Luisa Maria Jacinta C. Jocson