PH External Debt Up At $118.8-B

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

Photo Insert: On a quarterly basis, the external debt rose by 6.8% or by $7.5 billion from $111.3 billion as of end-December 2022.

The current debt stock is equivalent to 29% of gross domestic product (GDP), higher than the 27.5% registered in 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,” the BSP said.

It pointed out that a “statistical adjustment” led to a higher external debt-to-GDP ratio of 27.5% 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,” the BSP explained.

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 the said period,” the BSP noted.

On a quarterly basis, the external debt rose by 6.8% or by $7.5 billion from $111.3 billion as of end-December 2022.

The 6.8% quarter-on-quarter increase was traced to: net availments of $2.7 billion as the 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, the public sector external debt stood at $75.2 billion, up from the end-2022’s $67.4 billion.

About $68.1 billion or 90.5% were NG borrowings, while $7.1 billion were loans availed of by government-owned and controlled corporations, government financial institutions and the BSP. Private sector debt amounted to $43.6 billion compared to $43.9 billion posted at end-2022.

Meanwhile, the BSP said the 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 (GIR).

The debt service ratio (DSR), on the other hand, increased to 12.9% from four percent of the 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 the adequacy of the country’s FX earnings to meet maturing obligations.

The Philippines’ debt stock is predominantly medium- and long-term (MLT) in nature at 85.4%, or with original maturities longer than one year. About 14.6% 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, the BSP said.

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.

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