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Foreign debt jumps $6.2 billion to $87.5 billion

The country’s foreign debt climbed $6.2 billion, or 7.6 percent, to a record $87.5 billion as of end-June from $81.3 billion a year ago as the government issued global bonds and tapped more official development assistance loans this year to finance its COVID-19 response programs.

Data from the Bangko Sentral ng Pilipinas showed the outstanding external debt rose $6 billion, or 7.4 percent, on a quarterly basis from $81.4 billion as of end-March.

“The rise in the debt stock during the second quarter was due to net availments of $2.9 billion, largely attributed to the national government as it raised $2.4 billion from the issuance of global bonds and $3.1 billion from multilateral and bilateral creditors to fund its general financing requirements and COVID-19 pandemic response programs/projects,” Bangko Sentral ng Pilipinas Governor Benjamin Diokno said in a statement Friday.

Diokno said the increase in the debt level was due to prior periods’ adjustments of $2.1 billion; increase in non-residents’ investment in Philippine debt papers issued offshore of $839 million; and positive foreign exchange revaluation of $227 million as the US dollar weakened against other currencies, including the Philippine peso.

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

Diokno said that despite the increase in the external debt level, key external debt indicators remained at prudent levels. The gross international reserves reached $93.5 billion as of end-June and represented 8.7 times cover for short-term debt under the original maturity concept.

Public sector external debt increased to $51.0 billion in the second quarter from $45.1 billion in the first quarter. About $44.4 billion of public sector obligations were national government borrowings while the remaining $6.6 billion pertained to borrowings of government-owned and -controlled corporations, government financial institutions and the BSP.

Private sector debt slightly increased from $36.3 billion as of end-March to $36.5 billion as of end-June, with share to total decreasing from 44.6 percent to 41.7 percent.

The recorded increase was due to prior periods’ adjustments ($2.1 billion) and net availments ($334 million) by private non-banks, which were offset by net repayments ($2.3 billion) by private banks.

Major creditor countries were Japan ($15.3 billion), the United States of America ($3.2 billion), the Netherlands ($3.1 billion) and the United Kingdom ($2.6 billion).

Loans from official sources had the largest share of 34.9 percent of the total outstanding debt and included multilateral and bilateral creditors led by Japan, $8.2 billion; China, $1.1 billion; and Korea, $514 million.

Foreign holders of bonds and notes followed with 33.6 percent. Obligations to foreign banks and other financial institutions accounted for 26.3 percent; and the rest (5.1 percent) were owed to other creditor types, mainly suppliers/exporters.

Topics: foreign debt , COVID-19 , response programs , Bangko Sentral ng Pilipinas
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