In 2023, PH saw its debt service burden surge to $14.8B

Last year, the country’s debt service burden surged by 74 percent to $14.8 billion from $8.5 billion, according to preliminary data from the Bangko Sentral ng Pilipinas (BSP). Both principal and interest payments significantly increased during the 12-month period, with the former rising by 67 percent to $7.7 billion and the latter by 81 percent to $7.03 billion. The debt service burden encompasses payments on medium- to long-term credits, including those from the International Monetary Fund and loans under Paris Club agreements, among others. Outstanding external debt reached $125.4 billion by the end of December, up 12 percent from the previous year. Public sector debt amounted to $77.8 billion, while private sector debt stood at $47.6 billion. As a percentage of GDP, the debt service burden rose to 3.4 percent, while external debt accounted for 28.7 percent of GDP. The increase in external debt was attributed to net availments of $4.9 billion by both private and public sector borrowers. Rizal Commercial Banking Corp. chief economist Michael Ricafort explained that the nearly twofold increase in external debt service burden was mainly due to surging global interest rates and elevated oil and commodity prices following the Russia-Ukraine conflict. Ricafort suggested that possible Fed rate cuts later in 2024 could alleviate the country’s external debt service burden by reducing interest expenses on foreign debts.

Business News: In 2023, PH saw its debt service burden surge to $14.8B