THE country’s outstanding external debt as of end-2017 rose $730 million or 1 percent to $73.1 billion from $72.4 billion as of end-September 2017, Bangko Sentral ng Pilipinas Governor Nestor Espenilla Jr. said over the weekend.
“The growth in the debt level during the (last) quarter was due largely to the $1.3-billion increase in the holdings of Philippine debt papers by non-residents, reflecting sustained investor interest in the country,” Espenilla said in a statement.
He said positive foreign exchange revaluation adjustments of $70 million contributed to the increase in the debt stock as the Philippine peso strengthened against the US dollar in the last quarter of 2017 due to strong remittances and equity inflows.
He also said net principal repayments amounting to $643 million by both public and private sector borrowers had a dampening effect on the debt stock.
The private sector accounts declined $1.7 billion (or 4.6 percent) from $37.3 billion in 2016 to $35.6 billion. The drop was mainly attributed to the non-bank sector, whose foreign loans decreased from $22.2 billion a year ago to $20.2 billion in 2017.
“This is consistent with the downward trend in loans from commercial sources (banks and other financial institutions, which are main sources of corporate funding), from the $25.8-billion level recorded a year ago to $22.5 billion,” he said.
He also said the decrease translated into a drop in US-dollar denominated borrowings from $48.6 billion to $45.6 billion (or by US$3.0 billion) during the year.
“These developments may be indicative of Philippine corporate borrowers’ deleveraging from foreign borrowings to minimize foreign exchange risk, among others,” he said.
External debt refers to all types of borrowings by Philippine residents from non-residents, following the residency criterion for international statistics.
Espenilla said key external debt indicators remained at comfortable levels in 2017. Gross international reserves stood at $81.6 billion as of end-2017 and represented a 5.7 times cover for short-term debt under the original maturity concept.