The Market Monitor Minding the Nation's Business
The Philippines’ outstanding external debt declined to US$147.35 billion at end-March 2026 from US$147.65 billion a quarter earlier and remained manageable.
Key debt indicators remained sound. External debt as a share of gross domestic product (GDP) improved slightly to 30.0 percent from 30.3 percent in the previous quarter, despite slower economic growth.
Liquidity conditions also strengthened. Short-term external debt based on the remaining maturity concept (STRM) declined to US$25.50 billion, while gross international reserves remained ample at US$106.64 billion. This is equivalent to 4.18 times STRM, indicating a strong capacity to meet near-term external commitments and a robust reserve adequacy position relative to emerging economy peers.
Debt service ratio likewise remained moderate at 9.5 percent, although higher than the 8.5 percent recorded a year ago due to increased principal payments.
The slight quarter-on-quarter decline in external debt was driven by lower non-resident holdings of Philippine debt securities, reflecting more cautious investor sentiment and tighter financing conditions for emerging markets during the quarter.
Year-on-year, external debt increased slightly from the end-March 2025 level of US$146.74 billion. The rise was driven mainly by new borrowings by the National Government and private sector, reflecting ongoing financing for development priorities and continued support for trade and business activity.
Overall, the external debt profile remains resilient, with developments primarily reflecting market-driven adjustments and financing requirements.