The country’s foreign debt climbed 6.8 percent to $118.8 billion as of the first quarter this year from $111.3 billion in the fourth quarter of 2022 as the government raised more funds from the international market to finance pandemic-recovery measures and infrastructure development.
Data from the Bangko Sentral ng Pilipinas also showed that the external debt also increased $9.1 billion from $109.75 billion in the first quarter of 2022.
External debt refers to all types of borrowings by Philippine residents from non-residents, following the residency criterion for international statistics.
The BSP said despite the higher debt stock in the first quarter, the external debt ratio remained at a prudent level. External debt expressed as a percentage of the gross domestic product was recorded at 29.0 percent in the first quarter, higher than 27.5 percent in fourth quarter of 2022 due to a change in the scope of the external debt stock to include non-resident holdings of peso-denominated debt securities issued onshore of $3.8 billion.
“Borrowings by the public sector for the national government’s general financing requirements, funding of pandemic recovery measures and other infrastructure programs, among others, also contributed to the growth in the debt stock,” the BSP said.
“Other key external debt indicators also remained at manageable levels. Gross international reserves stood at $101.5 billion as of end-March 2023 and represented 5.9 times cover for short-term debt based on the original maturity concept,” it said.
The debt service ratio rose to 12.9 percent from 4.0 percent in the same period last year on higher recorded repayments. 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 foreign exchange earnings to meet maturing obligations.
Other drivers for the increase in the external debt stock were the net availments of $2.7 billion, largely by the national government as it raised $3.0 billion from the issuance of a multi-tranche global bond for its general financing requirements; prior periods’ adjustments of $767 million; and the appreciation of other currencies against the US dollar which increased the US dollar equivalent of borrowings denominated in other currencies, thereby resulting in an overall positive FX revaluation of $432 million.
Meanwhile, the transfer of Philippine debt papers from non-residents to residents of $1.7 billion and negative FX revaluation of $1.3 billion partially tempered the increase in the debt stock.
Data showed that public sector external debt climbed $7.8 billion to $75.2 billion in the first quarter from the previous quarter’s $67.4 billion level. The increase raised its share to total from 60.1 percent to 63.3 percent.
About $68.1 billion (90.5 percent) of public sector obligations were national government borrowings, while the remaining $7.1 billion pertained to loans of government-owned and controlled corporations, government financial institutions and the Bangko Sentral ng Pilipinas.
The BSP said that as of end-March 2023, the maturity profile of the country’s external debt remained predominantly medium- and long-term in nature, or those with original maturities longer than one year, with share to total at 85.4 percent.
The weighted average maturity for all MLT accounts slightly increased to 17.3 years from 17.2 years in end-2022, with public sector borrowings having a longer average term of 20.2 years compared to 7.2 years for the private sector.
Short-term accounts, or those with original maturities of up to one year, comprised only 14.6 percent of the outstanding debt stock and consisted of bank liabilities, trade credits and others. “This means that FX requirements for debt payments are still well spread out and, thus, manageable,” the BSP said.
Major creditor countries were Japan ($14.3 billion), the United States ($3.6 billion) and the United Kingdom ($3.2 billion).
Loans from official sources (multilateral and bilateral creditors) had the largest share (37.9 percent) of the total outstanding debt, followed by borrowings in the form of bonds/notes (35.2 percent) and obligations to foreign banks and other financial institutions (20.9 percent); the rest (5.9 percent) were owed to other creditors (mainly suppliers/exporters).
The country’s debt stock remained largely denominated in US dollar (76.0 percent) and Japanese yen (8.3 percent), while the 15.7 percent balance pertained to 17 other currencies, including the Philippine peso, euro and Special Drawing Rights.