The Philippines’ foreign debt has surged to roughly ₱9.71 trillion, moving closer to the ₱10-trillion mark as government and private banks increased overseas borrowing in the second quarter of 2026.
Outstanding external debt climbed to $154.93 billion as of end-June, equivalent to about ₱9.71 trillion at the current exchange rate of roughly ₱62.67 to the dollar.
That was up from $147.35 billion, or around ₱9.23 trillion at today’s exchange rate, just three months earlier.
The increase translates to roughly ₱475 billion more in foreign debt in a single quarter when both figures are converted using the current exchange rate.
Despite the eye-popping headline number, the country’s external debt position remains broadly manageable, supported by sizeable foreign exchange reserves and sufficient earnings to meet upcoming repayments.
External debt as a share of the economy climbed to 31.6 percent of gross domestic product, from 30 percent in the previous quarter, reflecting faster growth in foreign obligations compared with economic output.
The increase was driven mainly by net borrowing by the National Government and private domestic banks.
On a year-on-year basis, external debt also increased from $148.87 billion in June 2025, primarily because of the government’s global bond issuances and loan availments for budgetary and development financing.
₱6.56-trillion reserve cushion
Helping keep risks in check is the country’s substantial stockpile of foreign exchange reserves.
Gross international reserves stood at $104.74 billion, equivalent to about ₱6.56 trillion at the current exchange rate.
That was more than enough to cover the country’s $31.64 billion in short-term external debt, equivalent to approximately ₱1.98 trillion, falling due over the next 12 months.
The ratio of international reserves to short-term external debt stood at 3.31 times.
In practical terms, the Philippines has more than three dollars in reserves for every dollar of external debt that needs to be paid within a year.
That provides an important cushion against global financial shocks, currency volatility, higher international borrowing costs and other external risks.
Ability to pay remains solid
The country’s debt service ratio also improved slightly to 9 percent from 9.2 percent a year earlier.
The indicator measures how much of the country’s foreign exchange earnings are needed to pay principal and interest on external debt.
The lower ratio suggests the Philippines continues to generate enough foreign currency earnings to comfortably service its overseas obligations.
Foreign exchange revaluation effects caused by the stronger US dollar and a modest reduction in non-resident holdings of Philippine debt securities partly offset the increase in borrowing during the quarter.
Still, the rapid rise in the absolute debt figure puts renewed focus on the quality and productivity of new borrowing.
Foreign financing can help fund infrastructure, economic development and other investments, but additional debt also increases exposure to currency movements, interest rates and future repayment obligations.
For now, the Philippines appears to have enough financial ammunition to handle its growing foreign debt.
But with the external debt pile now worth nearly ₱9.7 trillion at current exchange rates, keeping economic growth strong and ensuring borrowed funds generate productive returns will be critical to preventing that headline number from becoming a bigger concern.