THE country's debt service burden surged by 132.75 percent to $11.94 billion at the end of October 2023 from $5.13 billion a year earlier, preliminary Bangko Sentral ng Pilipinas (BSP) data showed.

Both principal and interest payments ballooned during the 10-month period, the former by nearly 114 percent to $6.26 billion from $2.93 billion and the latter by almost 158 percent to $5.68 billion from $2.20 billion.

The debt service burden includes principal and interest payments on medium- to long-term credits like those from the International Monetary Fund, loans subject to Paris Club agreements and debt restructuring by commercial banks, as well as New Money Facilities.

It also includes interest payments on fixed and revolving short-term liabilities of banks and nonbanks but not prepayments on future years' maturities of foreign loans and principal payments on fixed and revolving short-term liabilities.

The country's outstanding external debt, meanwhile, reached $118.83 billion as of end-September, some 10 percent higher compared to year-earlier $107.91 billion.

Broken down, $73.70 billion of the amount was owed by the public sector, up 13.76 percent from the $64.79 billion recorded a year ago.

Private sector debt amounted to $45.13 billion, 4.6 percent higher than the $43.12 billion reported at the end of the same period last year.

As a percentage of gross domestic product (GDP), the debt service burden rose to 3.5 percent as of end-September from 1.6 percent a year earlier.

External debt, meanwhile, was equivalent to 28.1 percent of GDP for the same period, up from 26.8 percent in the comparable 2022 period.

Sought for comment, Rizal Commercial Banking Corp. chief economist Michael Ricafort said the rise was due to interest rate hikes that followed Russia's invasion of Ukraine.

He also noted a rise in the country's foreign borrowings that led to a higher debt servicing bill.

"Possible Fed rate cuts for 2024 and easing inflation toward central bank inflation targets could help ease foreign debt servicing costs, going forward," Ricafort said.