The country’s foreign debt climbed by 3.1 percent or $3.3 billion in the first quarter to $109.8 billion from $106.4 billion in the fourth quarter of 2021 as the government borrowed more to fund infrastructure projects and COVID-19 response efforts, the Bangko Sentral ng Pilipinas said over the weekend.
Foreign or external debt refers to all types of borrowings by Philippine residents from non-residents.
Data showed that on a year-on-year basis, the country’s debt stock went up by $12.7 billion, driven by net availments of $16.4 billion, largely by the government ($12 billion) and prior periods’ adjustments of $3.2 billion.
Bangko Sentral Governor Benjamin Diokno said in a statement the rise in the debt level in the first quarter from the fourth quarter was due to net availments of $3.5 billion, mainly by the national government and private non-banks.
“The national government raised $2.3 billion from official creditors to fund its COVID-19 pandemic response programs and infrastructure projects as well as $2.3 billion from the issuance of global bonds under its 2022 Commercial Borrowings Program,” Diokno said.
The issuance included the debut of the government’s sustainability bond which aims to finance climate change mitigation and adaptation projects.
Non-bank private sector borrowers sought external credit amounting to $995 million to augment their working capital and finance their projects.
The BSP said the prior periods’ adjustments of $1.7 billion also contributed to the increase in the debt stock, while the transfer of Philippine debt papers issued offshore from non-residents to residents of $1 billion and negative foreign exchange revaluation of $841 million tempered the rise in the debt stock.
Diokno said external debt, despite the increase, remained manageable as the country recorded a 27.5-percent external-debt-to-GDP ratio as of end-March 2022. The ratio, a solvency indicator, remained one of the lowest in the ASEAN region.
The low EDT-to-GDP ratio indicates the country’s sustained strong position to service foreign borrowings, he said.
Diokno said other key external debt indicators remained at prudent levels. Gross international reserves stood at $107.3 billion as of end-March and represented 7.7 times cover for short-term debt based on the original maturity concept.
The debt service ratio dropped to 4.1 percent from 14.3 percent in the same period last year on scheduled lower repayments accompanied by higher receipts.
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.