The Bangko Sentral ng Pilipinas said over the weekend the country’s external debt ratios remained at prudent levels despite a slight increase in the third quarter.
Latest data showed that external debt, which refers to all types of borrowings by Philippine residents from non-residents, reached $107.9 billion as of end-September, up by $218 million or 0.2 percent from $107.7 billion in June 2022.
The increase in the debt level in the third quarter was due to net availments of $3.1 billion, partly offset by $1.2-billion negative foreign exchange revaluation; $893-million transfer of Philippine debt papers issued offshore (from non-residents to residents); and $778-million negative prior periods’ adjustments.
Bulk of the recorded availments in the quarter were from the increase in the reported short-term liabilities of banks as they sought the offshore market to meet its funding requirement for relending, investments and other FX transactions.
Public sector external debt declined to $64.8 billion as of end-September from $65.7 billion as of end-June. with share to total also decreasing to 60.0 percent from 61.0 percent.
About $56.8 billion (87.7 percent) of public sector obligations were government borrowings while the remaining $8.0 billion pertained to debt of government-owned and controlled corporations, government financial institutions and the BSP.
Private sector debt grew from $42.0 billion as of end-June to $43.1 billion as of end-September, with share to total increasing from 39.0 percent to 40.0 percent.
The rise in private sector debt was mainly due to an increase in the short-term liabilities reported by banks, which offset prior periods’ adjustments of negative $1.0 billion, transfer of Philippine debt papers from non-residents to residents of $240 million and negative FX revaluation of $128 million.
Meanwhile, the strengthening of the US dollar against other currencies brought down the US dollar equivalent of borrowings denominated in other currencies, providing an offsetting effect on the external debt levels.
The BSP said that on a year-on-year basis, the country’s debt stock rose by $2.0 billion, driven by net availments of $9.9 billion, largely by the national government ($5.5 billion) and prior periods’ adjustments of $1.5 billion.
The country’s external debt to GDP remained at 26.8 percent similar to that of the previous quarter. The low external debt to GDP ratio, a solvency indicator, indicates the country’s sustained strong position to service foreign borrowings in the medium to long-term. The ratio remains one of the lowest when compared to other ASEAN member countries, according to the BSP.
Gross international reserves stood at $93.0 billion as of end-September 2022 and represented 5.7 times cover for short-term debt based on the original maturity concept.