External debt up 8% in 2018 to $79 billion

Published March 17, 2019, 12:00 AM

by manilabulletin_admin

By Lee C. Chipongian

The country’s external debt went up by eight percent year-on-year to $79 billion in 2018 from $73.1 billion with more government funding through loans for infrastructure projects.

MB file photo.
MB file photo.

The Bangko Sentral ng Pilipinas (BSP) in a statement said outstanding foreign debts increased because of net availments by the public sector amounting to $3.5 billion last year, and another $3.2 billion from the private sector.

The National Government, in particular, have more financing for its infrastructure development and social spending programs while private banks were required to increase its funding to comply with Basel 3 rules on liquidity coverage ratio. The BSP said increased loans were also used to fund purchases for government securities, working capital for corporations, and to “expand funding base, and extend term liabilities.”

The higher debt stock was also attributed to prior periods’ adjustments amounting to $594 million. However, the increase in resident holdings of Philippine debt papers issued offshore of $1.2 billion, and negative foreign exchange revaluation adjustments of $125 million, partially tempered the sharp increase in the debt stock during the year, according to the BSP.

On a quarterly basis, debt stock as of end-December 2018 was by 3.3 percent from end-September’s $76.4 billion.

External debt, which are borrowings by Philippine residents from non-residents, continue to be predominantly medium- to long-term with $62.9 billion of the total loans or 79.7 percent. Short term accounts accounted for 20.3 percent of the balance.

“The weighted average maturity for all (loan) accounts remained at 17 years (as of December) with public sector borrowings having a longer average term of 21.3 years compared to 7.7 years for the private sector. This means that foreign exchange requirements for debt payments are well spread out and, thus, more manageable,” said the BSP.

“(The) key external debt indicators remained at prudent levels despite the rise in external debt,” the statement quoted BSP Governor Benjamin E. Diokno, who was appointed last March 4, replacing Governor Nestor A. Espenilla Jr. who died on February 23 of cancer.