Foreign debt declined $3.8 billion or 4.9 percent to $73.8 billion at the end of the first quarter of 2017 from $77.6 billion a year ago, data from Bangko Sentral ng Pilipinas show.
Bangko Sentral said the decline in external debt was due to net principal repayments by both the public and private sectors, previous periods’ audit adjustments due to late reporting and negative foreign exchange revaluation adjustments.
External debt refers to all types of borrowings by Philippine residents from non-residents, following the residency criterion for international statistics.
Data showed that on a quarterly basis, foreign debt also went down by $958 million or 1.3 percent from $74.8 billion in the fourth quarter of 2016.
“The decline in the debt levels during the first quarter resulted mainly from prior periods’ adjustments due to late reporting of principal payments; transfer of Philippine debt papers from non-residents to residents [$497 million]; and net principal repayments of $255 million,” Bangko Sentral Governor Amando Tetangco Jr. said.
“The downward impact of these developments on the debt stock was partially offset by the positive foreign exchange revaluation adjustments [$466 million] as the Japanese yen strengthened against the US dollar,” he said.
Public sector external debt increased to $37.7 billion in the first quarter (or 51 percent of total debt stock) from $37.5 billion in the fourth quarter of 2016.
This was due largely to net availments of $637 million, mainly by the national government ($583 million) and the Development Bank of the Philippines ($251 million) and upward FX revaluation adjustments ($461 million).
These were partly mitigated by the $917 million decline in non-residents’ investments in debt papers issued offshore by the public sector. About $30.6 billion (81.3 percent of public sector obligations) were national government borrowings.
Private sector debt went down by $1.1 billion to $36.1 billion in the first quarter (49 percent of total) due to net repayments of $893 million and previous periods’ adjustments (negative $680 million).
Increased non-resident holdings of private sector debt papers issued offshore ($420 million) partially offset the downward pressures on private sector debt. About $13.2 billion of these accounts were borrowings without BSP approval (including capital leases of $1.3 billion).
Tetangco said “key external debt indicators remained at comfortable levels during the first quarter of 2017. Gross international reserves stood at $80.9 billion as of end-March 2017 and represents 5.4 times cover for short-term debt under the original maturity concept.”
Foreign debt remained heavily biased towards medium- to long-term accounts which represented 79.6 percent of total. This means that FX requirements for debt payments are well spread out and, thus, more manageable, according to Bangko Sentral.
The weighted average maturity of MLT accounts stood at 17.4 years, with public sector borrowings having a longer average term of 23.1 years compared to 8.1 years for the private sector.
The bulk of the country’s debt stock remained denominated in US dollar (63.4 percent) and Japanese yen (12.6 percent). US dollar-denominated multi-currency loans from the World Bank and Asian Development Bank had a 13.6 percent share to total, while the remaining 10.5 percent balance consisted of 17 other currencies, including the Philippine peso (6.5 percent), SDR (2.1 percent), and the euro (1.2 percent).