The country’s outstanding external debt declined $1.4 billion or 1.5 percent to $97 billion as of end-March from $98.5 billion in December, Bangko Sentral ng Pilipinas Governor Benjamin Diokno said over the weekend.
“The decline in the debt level during the first quarter of 2021 was caused mainly by net repayments of $3.1 billion attributed to the settlement of obligations by private local banks and the redemption by the national government of its maturing bonds,” Diokno said in a statement.
He said the negative foreign exchange revaluation of $1 billion contributed to the decrease as the US dollar strengthened against other currencies amid the rise in US Treasury bond yields.
The downward impact of the net repayments and FX revaluation more than offset prior periods’ adjustments of $2.3 billion and increase in non-resident investments in Philippine debt papers issued offshore of $365 million.
Data showed, however, that on a year-on-year basis, the country’s debt stock increased by $15.6 billion because of the net availments of $13.5 billion, mainly by the national government and private non-banks; transfer of Philippine debt papers from residents to non-residents of $1.1 billion; prior periods’ adjustments of $687 million; and positive FX revaluation of $390 million.
External debt refers to all types of borrowings by Philippine residents from non-residents, following the residency criterion for international statistics.
Diokno said key external debt indicators remained at prudent levels. Gross international reserves stood at $104.5 billion as of end-March and represented 7.7 times cover for short-term debt based on the original maturity concept.
He said that the maturity profile of the country’s external debt remained predominantly medium to long term in nature (those with original maturities longer than one year), with share to total at 85.9 percent.
Short-term accounts (or those with original maturities of up to one year) comprised the 14.1 percent balance of debt stock and consisted of bank liabilities, trade credits and others.
Public sector external debt in the first quarter increased to $56.8 billion from $58.1 billion in the fourth quarter. About $50.8 billion of public sector obligations were borrowings of the national government while the remaining $5.9 billion pertained to loans of government-owned and -controlled corporations, government financial institutions and the BSP.
Private sector debt slightly declined from $40.4 billion as of end-December 2020 to $40.3 billion as of end-March 2021, although the share to total increased from 41.0 percent to 41.5 percent.
The recorded drop was due to settlement of maturing obligations by private domestic banks; increase in resident investments in Philippine debt papers issued offshore; and negative FX revaluation, which slightly offset the increase caused by prior periods’ adjustments.
Major creditor countries were Japan ($15.3 billion), the Netherlands ($3.2 billion), the United States ($3.0 billion), and the United Kingdom ($2.5 billion).
Creditor mix continues to be well-diversified. Borrowings in the form of bonds/notes had the largest share (35.8 percent) of total outstanding external debt, followed by loans from official sources (multilateral and bilateral creditors) comprised of Japan, $8.7 billion; China, $1.1 billion; and France, $722 million, among others.
The country’s debt stock remained largely denominated in US dollar (56.9 percent) and Japanese yen (11.4 percent). US dollar-denominated multi-currency loans from the World Bank and Asian Development Bank represented 19.5 percent. The 12.2 percent balance pertained to 14 other currencies, including the Philippine peso, euro and SDR.