Photo courtesy of Bangko Sentral ng Pilipinas.
The Philippines posted a modest reduction in its external debt in the fourth quarter of 2025, giving the country a slight improvement in debt manageability despite softer-than-expected economic growth and a more cautious market environment, the Bangko Sentral ng Pilipinas (BSP) said Friday.
BSP data showed the country’s outstanding external debt slipped by 1.0 percent quarter-on-quarter to US$147.65 billion as of end-December 2025, down from US$149.09 billion in September. The decline was largely driven by net sales of Philippine debt securities by non-residents, which reached US$2.28 billion during the period.
The debt stock was further pulled down by net valuation adjustments amounting to US$659.38 million, reflecting the lower US dollar value of borrowings denominated in other currencies. These factors more than offset the impact of net availments totaling US$1.44 billion in the quarter.
With the decline in external obligations, the country’s external debt-to-GDP ratio, a widely watched measure of debt sustainability, improved slightly to 30.3 percent from 30.9 percent in the previous quarter. The movement signaled a marginal easing in the debt burden relative to the size of the economy.
Short-term external debt based on the remaining maturity concept rose to US$26.80 billion from US$26.36 billion in the previous quarter. Even so, the Philippines’ gross international reserves stood at US$110.83 billion, providing a solid buffer against near-term obligations. This translated to 4.14 times cover, underscoring the country’s strong reserve adequacy position compared with many of its emerging market peers.
The country’s ability to service its foreign obligations also showed improvement. The debt service ratio declined to 8.3 percent from 11.5 percent a year earlier, as lower principal and interest payments reduced the share of export earnings and other foreign inflows devoted to debt servicing.
Despite the quarter-on-quarter decline, the country’s external debt still posted a 7.3 percent increase from a year earlier. The annual rise was fueled mainly by fresh borrowings, including US$3.29 billion in bond issuances by the National Government and US$3.72 billion in external financing secured by private sector banks.
Additional upward pressure came from net valuation adjustments amounting to US$1.34 billion, as well as net acquisitions of Philippine debt securities by non-residents totaling US$1.23 billion.
Taken together, the latest figures suggest that while the Philippines continued to tap external financing to support both public and private sector needs, the fourth quarter brought a welcome pause in debt accumulation and a slight improvement in key indicators of sustainability.