Outstanding external debt, or borrowings owed by residents to non-residents, rose in the first quarter of the year on account of borrowings by the national government and the banking sector.

The external debt reached $146.74 billion at end-March, up by 6.6 percent from the previous quarter and up by 14 percent from the first quarter of last year.

The latest external debt figure was equivalent to 31.5 percent of gross domestic product. This was higher than the 29.8 percent in the previous quarter but still reflects the country’s ability to repay its external obligations.

As of end-March, short-term external debt based on the remaining maturity concept stood at $32.67 billion.

This level remains well-covered by gross international reserves (GIR), which amounted to $106.67 billion, providing 3.27 times cover for short-term obligations. The country's GIR level continues to provide a robust external liquidity buffer, despite the downward trend of the short-term external debt cover in recent years.

Meanwhile, the debt service ratio, another indicator of capacity to service debt that compares the country’s loan payments with its income from exports and other inflows, declined to 8.4 percent from 9 percent a year earlier. This reflected lower principal and interest payments by resident borrowers in the first quarter of 2025.

The increase in external debt in the first quarter was primarily attributed to the national government’s fund-raising activity meant to support infrastructure projects and other budgetary requirements. The national government raised $5.06 billion from issuance of global bonds and loans extended by foreign development institutions.

In addition, local banks accessed offshore markets in the same period for short-term financing to support trading operations and address liquidity needs.

On year-on-year terms, the increase in the external debt was also driven primarily by bond issuances by the national government, which totaled $7.83 billion, and borrowings by local banks amounting to $6.14 billion. Bangko Sentral ng Pilipinas