The Philippines' foreign debt payments dropped by almost half in January 2025. According to a new report by the Bangko Sentral ng Pilipinas (BSP), total debt payments from abroad are now at ₱44.7 billion (or $799 million) — lower than the ₱98 billion (or $1.75 billion) in the same month last year.
Of this total, interest payments increased by 3.8% and reached ₱40.3 billion ($719 million), while principal payments or payments on the loan itself fell by 92.5%, from ₱59.4 billion ($1.06 billion) last year to ₱4.4 billion ($79 million) now.
According to Michael Ricafort, chief economist of Rizal Commercial Banking Corp. (RCBC), the big drop is because there is less external debt maturity or principal payment this year compared to last year. This is also one of the effects of the government's efforts to reduce its reliance on foreign loans to avoid foreign exchange risks.
He added that the decrease in bills at the beginning of the year is a normal pattern. It is often the case that the budget deficit and debt are larger before the end of the year, then subside as the new year approaches.
The external debt service burden refers to a country's total payments on its external debt — including principal and interest payments. It also includes loans from the IMF, Paris Club, and commercial banks.
