Philippines’ External Debt Climbs in Q2 2025 on Dollar Weakness

The Philippines’ external debt rose in the second quarter of 2025, driven largely by currency movements as the U.S. dollar weakened, the Bangko Sentral ng Pilipinas (BSP) reported late Friday.

Outstanding obligations to foreign creditors reached $148.87 billion between April and June, up 1.5 percent from the $146.74 billion posted in the first quarter. The central bank said this represented 31.2 percent of gross domestic product (GDP), slightly lower than the 31.5 percent recorded three months earlier.

“The increase in external debt for Q2 2025 was primarily due to valuation effects from the depreciation of the US dollar,” the BSP noted in a statement. The weaker dollar increased the dollar value of borrowings denominated in other currencies by $1.49 billion.

A net purchase of Philippine debt securities amounting to $660.96 million also contributed to the uptick, while net repayments of $315.67 million partly offset the increase. Overall, “the external debt stock remained sustainable,” the BSP stressed.

Debt Composition and Creditors

Central bank data showed that the majority of the country’s external debt, or $127.46 billion, was medium- and long-term in nature. More than a third, or $50.24 billion, was held by bond and noteholders, followed by multilaterals at $39.97 billion and banks or other financial institutions at $33.35 billion.

Japan remained the Philippines’ largest creditor during the April to June period, with outstanding loans reaching $15.6 billion. The United Kingdom ranked second at $6.36 billion, followed by China with $4.76 billion.

Over two-thirds of the country’s external debt—$106.45 billion—was denominated in U.S. dollars.

Year-on-Year Surge

Compared to the same quarter in 2024, external debt rose by 14.4 percent, mainly fueled by borrowings. These included $5.83 billion in bond issuances by the national government and $3.44 billion in foreign financing secured by domestic banks.

As of end-June, short-term external debt based on the remaining maturity concept (STRM) stood at $28.63 billion. The BSP explained that STRM debt consists of loans with original maturities of one year or less, along with medium- and long-term accounts due within the next 12 months.

The BSP emphasized that this debt was adequately supported by gross international reserves (GIR) of $106.00 billion, enough to cover short-term obligations 3.7 times. “The country’s GIR-to-STRM debt ratio remains at par with emerging economy peers,” the central bank said.

Servicing and Sector Breakdown

The debt service ratio—used to measure the ability to meet loan obligations by comparing debt payments with export earnings and other inflows—fell to 8.7 percent from 9.8 percent.

According to the BSP, this decline reflected lower principal and interest payments.

Public sector external debt stood at $94.8 billion as of end-June, up from $91.54 billion at the end of March. By contrast, private sector debt slipped to $54.07 billion from $55.2 billion in the previous quarter. 

By fLEXI tEAM