External debt service up 3.42% in H1

Published September 17, 2019, 12:00 AM

by manilabulletin_admin

By Lee C. Chipongian

The country’s external debt service burden increased by 3.42 percent as of end-June to $4.63 billion versus $4.48 billion same time in 2018, based on data from the Bangko Sentral ng Pilipinas (BSP).

Bangko Sentral ng Pilipinas (BSP) logo

Principal payments at the end of the first half 2019 dropped to $3.02 billion from $3.14 billion last year, or down 3.82 percent year-on-year.
Interest payments, in the meantime, rose by 20.36 percent year-on-year to $1.61 billion from $1.34 billion.

The debt service ratio or DSR has consistently remained at single-digit levels, said the BSP. Also, key external debt indicators are still at “prudent levels despite the rise in external debt” as of end-June this year.

“The DSR, 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 FX (foreign exchange) earnings to meet maturing obligations,” explained the BSP. As of end-June, the ratio was at 7.5 percent, similar to what was reported in end-June 2018.

The external debt ratio, which is a solvency indicator, also indicates the country’s strong position to service foreign borrowings in the medium to long term.

The BSP reported over the weekend that as of end-June this year, the country’s total outstanding external debt was up by 12.55 percent year-on-year to $81.259 billion. On a quarter-on-quarter basis, foreign debt increased by one percent.

Public sector external debt increased to $42.3 billion as of end-June compared to the previous quarter’s $40.2 billion or end-March.
Private sector debt, on the other hand, declined to $39 billion compared to $40.3 billion at end-March.