PH external debt up at $118.8 B

June 24 ----- The country’s outstanding external debt went up by 8.25 percent to $118.812 billion as of end-March from same time last year of $109.753 billion, based on Bangko Sentral ng Pilipinas (BSP) data.

The current debt stock is equivalent to 29 percent of gross domestic product (GDP), higher than 27.5 percent from end-December 2022 and end-March last year. “Borrowings by the public sector for the National Government’s (NG) general financing requirements, funding of pandemic recovery measures, and other infrastructure programs, among others, contributed to the growth in the debt stock,” said the BSP on Saturday, June 17.

The BSP said a “statistical adjustment” led to a higher external debt to GDP ratio of 27.5 percent in 2022. The change in the scope of the external debt stock includes non-resident holdings of peso-denominated debt securities issued onshore amounting to $3.8 billion. “The statistical adjustment, which resulted from the availability of detailed information on non-resident holdings of said securities, is in line with the International Monetary Fund’s standards under the External Debt Statistics Guide and the International Balance of Payments and International Investment Position Manual, 6th edition for external debt reporting,” explained the BSP.

On a year-on-year basis, the debt stock increased by $9.1 billion. This was due to the following: net availments of $7.6 billion, of which $7.4 billion are NG borrowings; inclusion of non-residents holdings of peso-denominated debt securities worth $3.8 billion; and prior periods’ adjustments of $646 million. “The transfer of Philippine debt papers from non-residents to residents of $1.7 billion and negative foreign exchange (FX) revaluation of $1.3 billion partially tempered the increase in the debt stock for said period,” noted the BSP. On a quarterly basis, the external debt rose by 6.8 percent or by $7.5 billion from $111.3 billion as of end-December 2022.

The 6.8 percent quarter-on-quarter increase was attributed to: net availments of $2.7 billion as NG raised $3 billion from global bonds for its general financing requirements; prior periods’ adjustments of $767 million; and the appreciation of other currencies against the US dollar resulting in an overall positive FX revaluation of $432 million. As of end-March, public sector external debt stood at $75.2 billion, up from end-2022’s $67.4 billion. About $68.1 billion or 90.5 percent were NG borrowings, while $7.1 billion were loans by government-owned and controlled corporations, government financial institutions and the BSP. Private sector debt was at $43.6 billion compared to $43.9 billion end-2022. Meanwhile, the BSP said other key external debt indicators remained at manageable levels.

The country has US dollar reserves of $101.5 billion as of end-March. The latest report is $101.3 billion as of end-May. The debt stock since 2021 has exceeded the gross international reserves. The debt service ratio (DSR), on the other hand, increased to 12.9 percent from four percent same period last year because of repayments in the first quarter. The DSR, which relates principal and interest payments (debt service burden) to exports of goods and receipts from services and primary income, is a measure of adequacy of the country’s FX earnings to meet maturing obligations. Philippines’ debt stock is predominantly medium- and long-term (MLT) in nature at 85.4 percent, or with original maturities longer than one year. About 14.6 percent are short-term accounts or up to one year maturities. This means that FX requirements for debt payments are still well spread out and, thus, manageable, said the BSP.

The weighted average maturity for all MLT accounts is 17.3 years with public sector borrowings having a longer average term of 20.2 years compared to 7.2 years for the private sector.

Source: mb.com.ph