Foreign debt climbed by $4.84 billion to hit a record $111.268 billion as of end-2022 from $106.428 billion a year earlier, as the government continued to borrow funds to finance its recovery from the impact of the pandemic.
Data from the Bangko Sentral ng Pilipinas showed that on a quarterly basis, foreign debt also went up from $107.9 billion as of end-September 2022.
External debt refers to all types of borrowings by Philippine residents from non-residents, following the residency criterion for international statistics.
External debt, expressed as a percentage of the gross domestic product, was recorded at 27.5 percent in the fourth quarter of 2022, an increase from 26.8 percent in the third quarter and 27.0 percent in end-2021.
This resulted from public and private sector spending for pandemic recovery measures and sustaining enhanced business and commercial activity.
“The EDT to GDP ratio of 27.5 percent signals manageable debt levels as well as the sustained capability of the country to service foreign borrowings in the medium- and long-term,” the BSP said in a statement.
It said other key external debt indicators remained at prudent levels. Gross international reserves stood at $96.1 billion as of end-2022 and represented 5.8 times cover for short-term debt based on the original maturity concept.
The debt service ratio also improved to 6.3 percent in 2022 from 7.5 percent in 2021 on higher receipts and lower repayments from January 2022 to December 2022.
The debt service ratio, which relates principal and interest payments (debt service burden) to exports of goods and receipts from services and primary income, is a measure of adequacy of the country’s foreign exchange earnings to meet maturing obligations.
The rise in the debt stock in the fourth quarter was driven by net availments of $1.8 billion with the national government’s issuance of $2.0 billion global bonds, while private sector banks sought external financing of $765 million to support relending activities and to service maturing obligations.
Meanwhile, the appreciation of other currencies against the US dollar increased the greenback’s equivalent of borrowings denominated in other currencies, resulting in an overall positive foreign exchange revaluation of $1.5 billion.
The BSP said that as of end-2022, the maturity profile of the country’s external debt remained predominantly medium- and long-term in nature, with share to total at 85.1 percent.
Public sector external debt rose to $67.4 billion from $64.8 billion in the previous quarter. The increase slightly raised its share to total vis-à-vis private sector external debt from 60.0 percent to 60.6 percent.
About $59.8 billion (88.7 percent) of public sector obligations were government borrowings, while the remaining $7.6 billion pertained to loans of government-owned and controlled corporations, government financial institutions and the BSP.
Private sector debt also grew from $43.1 billion as of end-September 2022 to $43.9 billion as of end-December 2022, although the share to total slightly decreased from 40.0 percent to 39.4 percent.
Major creditor countries were Japan ($14.7 billion), the United States ($3.5 billion) and the United Kingdom ($3.2 billion).
The country’s debt stock remained largely denominated in US dollar (77.9 percent) and Japanese yen (8.8 percent), while the 13.3 percent balance pertained to 15 other currencies, including the euro, Philippine peso and special drawing rights.