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Foreign debt hit record $81.3b as of end-June

The country’s foreign debt climbed by more than $9 billion or 12.5 percent to hit a record $81.26 billion as of end-June from $72.2 billion a year ago, data from the Bangko Sentral ng Pilipinas show.

Bangko Sentral ng Pilipinas Governor Benjamin Diokno said despite rising debt, the external debt ratios remained at prudent levels when measured against the gross international reserves, which were recorded at $84.9 billion as of end-June.

BSP Governor Benjamin Diokno
Data showed that on a quarterly basis, the foreign debt stock also rose by $827 million or 1 percent from $80.4 billion registered as of end-March.

“The rise in the debt stock during the second quarter was brought about by the increase in non-residents’ investments in Philippine debt papers issued offshore amounting to $1.2 billion and positive foreign exchange revaluation adjustments amounting to $405 million,” Diokno said.

He said the net repayments amounting to $650 million and prior periods’ adjustments of $133 million partially offset the uptick in the debt stock.

Diokno said the year-on-year increase in debt stock was led by about by net availments ($8.8 billion), prior periods’ adjustments ($549 million) and foreign exchange revaluation adjustments ($385 million).

This upward impact on the debt stock was partially offset by the transfer of Philippine debt papers from non-residents to residents ($746 million).

External debt refers to all types of borrowings by Philippine residents from non-residents, following the residency criterion for international statistics.

The Bangko Sentral said the GIR stood at $84.9 billion as of end-June and represented 5.5 times cover for short-term debt under the original maturity concept.

The debt service ratio, which relates principal and interest payments (debt service burden or DSB) to exports of goods and receipts from services and primary income, was steady at 7.5 percent. It is a measure of the adequacy of the country’s FX earnings to meet maturing obligations. 

The maturity profile of the country’s external debt remained predominantly medium- and long-term in nature (those with original maturities longer than one year), with share to total at 80.8 percent.

Short-term accounts―or those with original maturities of up to one year―comprised the 19.2 percent balance of debt stock and consisted of bank liabilities, trade credits and others.

Public sector external debt increased to $42.3 billion from $40.2 billion in the previous quarter. About $35.2 billion (83.3 percent) of public sector obligations were national government borrowings while

the remaining $7 billion pertained to other government agencies’ loans.

Private sector debt declined from $40.3 billion in March to $39 billion in June, with share to the total

decreasing from 50.1 percent to 48.0 percent. The recorded decline in private sector borrowings was due largely to the reduction in bank liabilities.

Major creditor countries were Japan ($15.1 billion), the United States ($4 billion), the Netherlands ($3.2 billion) and the United Kingdom ($3 billion). Obligations to foreign banks and other financial institutions had the largest share (32.2 percent) of total outstanding debt, followed by loans from official sources, including multilateral (18.0 percent) and bilateral creditors (13.4 percent).

Topics: Bangko Sentral ng Pilipinas , BSP Governor Benjamin Diokno , Foreign debt
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