PH external debt service up 110% in January

The country’s external debt service burden increased by 110 percent to $1.729 billion in January compared to $823 million in the same period last year, data from the Bangko Sentral ng Pilipinas (BSP) showed.

When both the government or public sector, and corporates or the private sector make a lot of prepayments or repayments, the debt service burden will rise, according to BSP officials. The opposite happens or it declines when there are no prepayments of loans and bond redemptions or repayments.

For the month of January, external debt service principal payments totaled $1.052 billion, up by 306 percent from $259 million same time last year.

Interest payments, meanwhile, rose to $676 million, up by 19.85 percent from $564 million in 2023.

Principal external debt service is mostly fixed medium to long term credit while interest payments are on fixed and revolving shortterm credits of banks and non-banks.

Last year, external debt service burden totaled $14.752 billion, up by 74 percent from 2022’s $8.483 billion.

Principal payments amounted to $7.713 billion last year, up by 67 percent from $4.613 billion in 2022. Interest payments reached $7.039 billion which was higher by 82 percent from $3.871 billion in 2022.

Debt service burden represents both principal and interest payments after rescheduling. The principal and interest payments on fixed medium to long term credits include International Monetary Fund credits, other loans and facilities.

As of end-december 2023, the country has an outstanding external debt of $125.394 billion. This was higher by 12.7 percent from end-2022 level of $111.268 billion.

Last year, public sector external debt increased by 5.6 percent year-on-year to $77.8 billion which was about 62 percent of total external debt. About $71 billion or 91 percent of public sector obligations were borrowings of the National Government.

As for private sector debt, this increased by 5.4 percent to $47.6 billion last year, about 37.9 percent of the total external debt.