By Lee C. Chipongian
The country’s outstanding external debt went up by 9.88 percent to $80.43 billion at the end of the first quarter 2019 from same time last year of $73.19 billion because of new government borrowaings, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno announced over the weekend.
The external debt year-on-year increased by $7.23 billion due to these factors: Net availments of $9.2 billion, of which $3.8 billion are from the National Government (NG); and some $960 million prior periods’ adjustments.
“This upward impact on the debt stock was partially offset by: Transfer of Philippine debt papers from non-residents to residents ($2.3 billion, of which NG bonds amounted to $1.9 billion); and negative foreign exchange (FX) revaluation adjustments ($740 million),” the BSP noted in a statement.
On a quarter-on-quarter basis, external debt stock was up by 1.9 percent or $1.5 billion from $79 billion end-December 2018.
The BSP said the end-March foreign debt was higher than end-2018 because of the $1.8 billion worth of net availments during the period, with NG raising $1.5 billion from the global bonds market for “general financing requirements.”
“However, the rise in the debt stock was tempered by the increase in residents’ investments in Philippine debt papers including government bonds issued offshore,” said the BSP.
As of end-March, the public sector external debt was up at $40.2 billion from $39.7 billion end-December 2018. Public sector or government debt accounted for 49.9 percent of the total.
Around 84.5 percent or $33.9 billion of public sector obligations were NG borrowings while the remaining US$6.2 billion pertained to other government agencies loans, said the BSP.
As for the private sector debt, this also increased to $40.30 billion from $39.3 billion as of end-December 2018, and accounted for 49.7 percent of the total. Private sector borrowings rose because of $1 billion prior periods’ adjustments.
Bulk or 61.2 percent of Philippine foreign debt are in US dollars, the rest are in Japanese yen. Currency loans from the World Bank and Asian Development Bank comprised about 15.6 percent of currency mix.
Diokno said the latest external debt data still show that even at $80.40 billion, the “key external debt indicators remained at prudent levels despite the rise in external debt.” The external debt ratio to GDP was at 24 percent, up from same time last year of 23 percent.
Still, Diokno said the ratio “indicates the country’s sustained strong position to service foreign borrowings in the medium to long term.”
According to the central bank, Japan remains a major creditor with $14.4 billion, followed by the US with $3.7 billion. There were also foreign loans from Netherlands worth $3.7 billion and $3.4 billion from the United Kingdom.
In the meantime, 33.2 percent of external debt are owed to foreign banks and other financial institutions, while 18 percent are loans from official sources and about 13.8 percent from bilateral creditors.
Bilateral sources with loans of $11.1 billion include Japan, China and Korea. Bilateral loans from Japan amounted to $8 billion, $650 million from China and $584 million from Korea.
About 27.7 percent of external debt are in foreign holders of bonds and notes while the rest or 7.3 percent are loans from creditor types such as suppliers and exporters.
As of end-March, the weighted average maturity for all medium to long-term loans were down to 16.8 years from 17 years from end-2018. Public sector borrowings have a longer average term of 21 years compared to 7.6 years for the private sector. “This means that FX requirements for debt payments are well spread out and, thus, more manageable,” said the BSP.