ANALYSTS have pointed out the need to generate ample dollar earnings to meet future external debt obligations even as latest figures point to ‘responsible debt repayment’ rather than financial stress.
The latest data from the Bangko Sentral ng Pilipinas (BSP) showed that the Philippines’s external debt service burden (DSB) rose by 4.78 percent in the January to May 2026 period driven by higher interest payments.
BSP data showed the debt service burden (DSB) increased to $6.208 billion in the January to May period of 2026. This was 4.78 percent higher than the $5.925 billion posted in the same period last year.
DSB is the total principal and interest payments the country has to pay after the debt has been rescheduled.
Broken down, $3.2 billion of the external DSB for the five-month period was allotted for interest payments while $3.01 billion was for principal.
Principal payments climbed by 13.55 percent year-on-year from $2.649 billion, while interest payments declined by 2.29 percent from last year’s $3.275 billion.
Jonathan L. Ravelas, senior advisor at Reyes Tacandong and Co., said: ‘The latest figures point to responsible debt repayment rather than financial stress.’
However, Ravelas emphasized that the key challenge lies in ensuring that the economy continues to ‘generate sufficient dollar earnings to comfortably meet future debt obligations while preserving fiscal flexibility.’
For his part, Michael L. Ricafort, chief economist at Rizal Commercial Banking Corporation (RCBC) explained: ‘This has been a function of wider budget deficits, borrowings/debt to finance the budget deficit, and higher interest rates especially higher bond yields in recent/month years that increased debt servicing cost.’
Ricafort explained further that when converted to pesos, servicing of foreign debts, both principal and interest payments increased amid higher US dollar-peso exchange rate by about 8 percent since the conflict in the Middle East which started on February 28,2026 or more than six months ago.
For the coming months, Ricafort said foreign debt servicing costs ‘would be a function of future budget deficits, interest rate hikes locally and in the US/globally, foreign debt maturities especially increased borrowings since the Covid-19 pandemic and the US dollar-peso exchange rate since foreign debts are partly paid in pesos that the government collects as taxes and other major revenue sources to service debts.’
Meanwhile, the ratio of the country’s debt service burden to its export shipments plunged to 21.6 percent in January to May 2026 from 22.4 percent in the same period a year ago.
Data from the central bank showed the DSB to Exports of Goods, and Receipts from Services and Primary Income ratio stayed unchanged at 9.3 percent in the first five months of 2026.
In terms of other ratios, that of DSB to current account receipts likewise stayed at 8.9 percent in the January to May 2026 period-also the same rate as last year’s.
BSP’s DSB data consists of principal and interest payments on fixed medium- and long-term (MLT) credits, including loans covered by the Paris Club.
It also includes interest payments on fixed and revolving short-term liabilities of banks and non-banks, but excludes prepayments on future years’ maturities of foreign loans and principal payments on fixed and revolving short-term liabilities of banks and non-banks.
As of end-March 2026, the country’s external debt reached $147.35 billion, up by 0.42 percent year-on-year from $146.74 billion.
The bulk of the external debt was accounted for by the public sector compared to the private sector.
Public external debt stood at $95.655 billion as of end-March 2026, higher by 4.50 percent than the $91.535 billion recorded in the same period a year ago.
Private external debt, meanwhile, declined by 6.35 percent year-on-year to $51.696 billion as of end-March 2026 from $55.202 billion in the same period in 2025.