THE COUNTRY’S external debt payments declined by 14.8% as of end-May, preliminary data from the Bangko Sentral ng Pilipinas (BSP) showed.

The Philippines’ debt service burden on its external borrowings fell to $5.62 billion from $6.595 billion a year ago.

Central bank data showed principal payments slumped by 37.1% to $2.412 billion from $3.832 billion in the year-ago period.

On the other hand, interest payments rose by 16% to $3.207 billion from $2.764 billion a year earlier.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the decline was mainly due to the smaller amount of maturing external debt this year compared with last year.

“This could be a function of lower debt maturities versus year-ago levels. Lower commercial and multilateral foreign debt maturities are the main driver of the decline,” he said in a Viber message.

Mr. Ricafort also noted the weaker peso and elevated borrowing costs might have partly increased interest payments and some principal payments.

The peso sank to the P58-per-dollar level in May, the first time since November 2022.

The Monetary Board raised rates by 450 basis points (bps) from May 2022 to October 2023 to tame inflation. This brought the key rate to an over-17 year high of 6.5%.

The BSP has since reduced the rates by 25 bps last week, bringing the benchmark rate to 6.25%. This was the first time the central bank cut rates since November 2020.

As of the first quarter, the debt service burden as a share of gross domestic product (GDP) stood at 3% from 4.3% a year ago.

Outstanding external debt rose by 8.3% to a record $128.7 billion as of end-March, earlier data from the BSP showed.

This brought the external debt-to-GDP ratio to 29% from 28.9% a year earlier. Broken down, 17.8% came from the public sector, while 11.2% was from the private sector.

The BSP’s external debt data cover borrowings of Philippine residents from nonresident creditors, regardless of sector, maturity, creditor type, debt instruments or currency denomination.

The BSP gathers data on external debt through the reports submitted by borrowers and banks, as well as reports from major foreign creditors. — Luisa Maria Jacinta C. Jocson