‘Secure forex earnings amid debt service spike’
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REEL POLITICS “Inday Badiday na ba tayo dito sa Senado?” an angry Sen. Juan Miguel Zubiri
wonders aloud as he objects to the presentation of a video shown by Senator Imee Marcos before her privilege speech on Monday, describing the material as “propaganda” and “unparliamentary.” Marcos’s presentation linked several lawmakers to supposed moves for Charter change and term extension, prompting Zubiri to later move that the video be stricken from the Senate record. Story in Second Front Page, A14, “Senate ‘drama’ anew over Imee Marcos’s ‘propaganda video’.” ROY DOMINGO
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HE sharp jump in the Philippines’s external debt service burden is a signal that the country should “stay disciplined” to ensure strong foreign exchange earnings particularly from exports and remittances to fulfill its obligations, according to an analyst. An analyst pointed this out after latest data from the Bangko Sentral ng Pilipinas (BSP) showed that the Philippines’s external debt service burden (DSB) rose by 31.54 percent in the January to February 2026 period. BSP data showed the DSB increased to $2.127 billion in the January to February period of
2026, 31.54 percent higher than the $1.617 billion posted in the same period last year. DSB is the total principal and interest payments the country has to pay after the debt has been rescheduled. Broken down, $884 million of the external DSB for the twomonth period was allotted for principal, while $1.243 billion was for interest payments. Principal payments climbed by 129 percent year-on-year from $386 million, while interest payments marginally increased by 0.89 percent from last year’s $1.232 billion. Jonathan L. Ravelas, senior ad-
viser at Reyes Tacandong & Co. explained that the “sharp” jump in the country’s external debt service burden early this year is “less about a sudden deterioration and more about timing and structure.”
‘The big story’
RAVELAS pointed to the 129-percent surge in principal payments as the “big story.” He said: “This tells us maturities are clustering, meaning we’re repaying more obligations that simply fell due, rather than borrowing improperly.” In contrast, he said interest payments are “relatively flat,” which suggests borrowing costs are stabilizing despite the high global
rate environment. From a macro perspective, Ravelas said this is “manageable—but it’s a signal to stay disciplined.” “The Philippines still needs to ensure strong foreign exchange earnings, particularly from exports and remittances, to comfortably service these obligations. The key risk to watch is liquidity—if global financial conditions tighten again, refinancing could become more expensive,” the analyst pointed out further. While the latest data is not yet a “red flag,” Ravelas stressed: “We must continue lengthening debt maturities, diversify funding See “Debt,” A9
BusinessMirror A broader look at today’s business Tuesday, May 26, 2026 Vol. 21 No. 224
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‘WAR TO HEIGHTEN RISKS TO FINANCIAL SYSTEM’ www.businessmirror.com.ph
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By Andrea E. San Juan @andreasanjuan
HE Financial Stability Coordination Council (FSCC) has flagged risks to the Philippine financial system, particularly debt levels for both corporate and household sectors amid the ongoing Middle East conflict. In a statement on Monday, the FSCC noted that a prolonged war in the region could push oil prices higher, adding that this could weaken market sentiment, tighten financial conditions, and drag
down both global and domestic growth. As such, the council—composed of the Bangko Sentral ng Pilipinas (BSP), Department of See “War,” A2
DEFENSE, TRADE ON AGENDA IN PBBM STATE VISIT TO JAPAN By Samuel P. Medenilla
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@sam_medenilla
RESIDENT Ferdinand Marcos Jr. will be celebrating the country’s 70th anniversary of the normalization of diplomatic relations with Tokyo with the signing of new agreements on defense, trade and investment, and human resources during his first state visit in Japan this week, according to the Department of Foreign Affairs (DFA). The chief executive together with First Lady Louise Araneta-
Marcos and the Philippine delegate will travel to Japan from May 26 to 29 for the state visit upon the invitation of the Japanese government. It will be Marcos’s fourth visit to Japan since he assumed the presidency in 2022. In a press briefing in Malacañang on Monday, DFA spokesperson Analyn D. Ratonel said Marcos and Japanese Prime Minister Sanae Takaichi will announce the signing of the new bilateral agreements. “The President will also hold See “Trade,” A9
SABOTAGE? NGCP ASKS PNP HELP The National
Grid Corp. of the Philippines (NGCP) formally requested the assistance of the Philippine National Police (PNP) in investigating a possible act of sabotage involving the Ilijan-Tayabas 500-kiloVolt (kV) Transmission Line. The transmission disturbance resulted in the loss of around 1,700MW of power delivered from generating plants connected to the line. The incident further aggravated the already thin generation reserves in Luzon and Visayas, which eventually led to the declaration of red and yellow alerts in both grids. Story on page A4 Nation, “NGCP seeks police probe into possible sabotage of IlijanTayabas 500kV line.”
AFTER THE FLAMES Displaced residents from the fire-hit Parola Compound in Binondo patiently line up for government relief packs at the Delpan Sports Complex in Manila on Monday, May 25,
2026. Families affected by the massive weekend blaze are temporarily sheltering at the Delpan evacuation center after the fire tore through the densely populated community, leaving more than 2,500 families displaced and scrambling to recover from the devastation. NONIE REYES
Oil shocks to hike banks’ credit risk S
USTAINED high fuel cost due to a prolonged Middle East conflict is seen to increase the credit risk of banks in the Philippines and other countries in Asia-Pacific through loan portfolios and other financial channels, according to Moody’s Ratings. In a commentary on Monday, Moody’s Ratings explained how elevated energy costs would translate into gradual credit strain of banks among countries situated within the Asia Pacific region, including the Philippines. The credit rating agency pointed out that sustained high fuel costs in its central scenario will add on inflationary pressure in economies such as India, Indonesia, the Philippines and Bangladesh, “straining” consumers’ budgets and raising debt-servicing burdens for households and small and medium-sized enterprises (SMEs).
“This will translate into increased but gradual credit strain on such loans,” Moody’s Ratings said. However, it noted that given the absence of a macroeconomic hard landing, any deterioration in these portfolios is likely to be moderate. For retail loans, the credit rating agency said it expects some “deterioration” in non-mortgage retail loans across the region. In particular, banks in Indonesia and the Philippines are the “most exposed,” because of larger portfolios, at around 10 to 15 percent of gross loans, or due to significant growth in the last few years, as with the Philippines.
Other financial channels
MEANWHILE, the credit rating agency flagged foreign exchange dynamics and low remittance flows as risk channels for banks particularly for those countries which rely
heavily on energy imports. “Economies with high dependence on energy imports, capital flows, or both—such as Korea, India, Australia, Thailand, the Philippines and Indonesia—have faced greater currency depreciation [3 to 7 percent] against the dollar since the conflict in the Middle East began,” Moody’s Ratings said. The credit rating agency explained that local currency weakness raises the debt-servicing burden for borrowers with unhedged dollar loans, adding to banks’ asset quality concerns. Further, Moody’s Ratings said: “Remittance flows from Gulf Cooperation Council economies are another risk channel for banks in the Philippines and Bangladesh, given the significant share of remittances originating from nationals working in the Middle East.” “A prolonged conflict introduces
uncertainty if labor conditions in the Middle East are significantly disrupted, leading to softer remittance flows,” added the credit rating agency. So far, data for early 2026 suggests that remittances remain resilient, helping to sustain bank deposit bases. Nonetheless, any “material slowdown” in remittances would have a negative impact on banking system liquidity and local consumption, Moody’s Ratings underscored further. Despite the occurrence of the Middle East conflict, data released by the Bangko Sentral ng Pilipinas (BSP) showed that the money sent home by Filipinos based in Middle East countries even climbed by 19.94 percent to $565.91 million in March 2026, from the $471.84 million recorded in February. (See: https://businessmirror.com.ph/2026/05/24/ the-remittance-race/) Andrea E. San Juan
PESO EXCHANGE RATES n US 61.5940 n JAPAN 0.3878 n UK 82.9117 n HK 7.8621 n CHINA 9.0608 n SINGAPORE 48.1843 n AUSTRALIA 44.0643 n EU 71.6646 n KOREA 0.0405 n SAUDI ARABIA 16.4141 Source: BSP (May 25, 2026)