Foreign debt rose 8.2% to hit record $82.7b in September

The country’s foreign debt stock increased by $6.3 billion or 8.2 percent to hit a record $82.77 billion as of end-September from $76.41 billion a year ago, data from the Bangko Sentral ng Pilipinas show.

It was boosted by net debt availments amounting to $5 billion this year, foreign exchange revaluation adjustments amounting to $1.2 billion and prior periods’ adjustments translating into $812 million.

The upward impact on the debt stock was partially offset by the transfer of Philippine debt papers from non-residents to residents at $843 million. 

BSP Governor Benjamin Diokno said that on a quarterly basis, the outstanding external debt also rose 1.7 percent or $1.4 billion to $82.7 billion from $81.3 billion as of end-June.

BSP Governor Benjamin Diokno
BSP Governor Benjamin Diokno
“The rise in the debt stock during the third quarter was due to net availments of $2.2 billion attributed to bond issuances of the national government and private local banks,” Diokno said in a statement.

“Increase in residents’ investments in Philippine debt papers issued offshore amounting to $426 million, negative foreign exchange revaluation of $211 million, and prior periods’ adjustments of $114 million partially offset the uptick in the debt stock,” he said.

External debt refers to all types of borrowings by Philippine residents from non-residents, following the residency criterion for international statistics. 

Diokno said the key external debt indicators “remained at prudent levels despite the rise in external debt.” 

Data showed that the gross international reserves stood at $85.6 billion as of end-September, representing 5.4 times cover for short term debt under the original maturity concept. 

Public sector external debt rose to $42.5 billion in the third quarter from $42.3 billion in the second quarter. About $35.6 billion of public sector obligations were national government borrowings while the remaining $7 billion pertained to loans of government-owned and -controlled corporations, government financial institutions and the BSP. 

Private sector debt grew from $39 billion in June to $40.2 billion in September, with share to total also slightly increasing from 48 percent to 48.6 percent. 

“The recorded rise in private sector borrowings may be attributed to bond issuances of private local banks, of which $401 million are ASEAN green bonds,” the regulator said.

The debt service ratio improved to 6.4 percent as of September from 7 percent in the same period last year. The DSR, which relates principal and interest payments (debt service burden or DSB) to exports of goods and receipts from services and primary income, has consistently remained at single digit.  

External debt remained predominantly medium- and long-term in nature representing 80.8 percent of the total.  Short-term accounts, or those with original maturities of up to one year, comprised the 19.2 percent balance of debt stock and consisted of bank liabilities, trade credits and others. 

The weighted average maturity for all medium and long-term accounts increased to 17.1 years, from 16.8 years during the previous quarter, with public sector borrowings having a longer average term of 21.0 years compared to 8.5 years for the private sector. 

“This means that foreign exchange requirements for debt payments are well spread out and, thus, more manageable,” BSP said.

Major creditor countries for the period were Japan ($14.8 billion), the United States ($4.3 billion), the United Kingdom ($3.6 billion) and the Netherlands ($3.1 billion). 

Topics: foreign debt stock , Bangko Sentral ng Pilipinas , BSP , foreign exchange , BSP Governor Benjamin Diokno
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