By Lee C. Chipongian
The Philippine external debt went up by 8.2 percent year-on-year to $82.7 billion as of end-September, $6.3 billion more than the $76.4 billion in the same period last year, the Bangko Sentral ng Pilipinas (BSP) reported.
BSP Governor Benjamin E. Diokno said the country’s foreign debt stock increased because of the following: Net availments amounting to $5 billion; foreign exchange (FX) revaluation adjustments of $1.2 billion; and prior periods’ adjustments worth $812 million.
Diokno said that the “upward impact on the debt stock was partially offset by the transfer of Philippine debt papers from non-residents to residents” amounting to $843 million.
On a quarter-on-quarter basis, the outstanding external debt increased 1.7 percent or by $1.4 billion from $81.3 billion (end June 2019). This was due to the National Government and private local banks’ bond issuances amounting to $2.2 billion.
But an increase in residents’ investments in Philippine Debt Papers issued offshore amounting to $426 million, negative FX revaluation of $211 million, and $114 million previous adjustments curbed a higher increase in debt stock during the period.
Public sector external debt slightly grew to $42.5 billion as of end-September from $42.3 billion as of end-June. The BSP said about $35.6 billion of public sector loans were government borrowings while the remaining $7 billion are government-owned and -controlled corporations and government financial institutions loans. The private or corporate sector borrowed $40.2 billion during the quarter, more than $39 billion at end-June 2019. In the first nine months, private bank bond issuances totaled $401 million and these are ASEAN Green Bonds.
Major creditor countries were Japan with $14.8 billion, US with $4.3 billion, United Kingdom with $3.6 billion), and The Netherlands with $3.1 billion. The BSP said foreign banks and other financial institutions had the largest share with 32.6 percent of total outstanding debt, followed by loans from official sources with 17.7 percent. Bilateral creditors accounted for 13 percent.
Diokno said that “key external debt indicators remained at prudent levels despite the rise in external debt.”
The end-September $82.7-billion external debt is equivalent to 23.7 percent of gross domestic product, slightly higher than same time last year of 23.5 percent. External debt to gross national income improved to 19.7 percent from 19.9 percent in 2018.
“The (GDP) ratio indicates the country’s sustained strong position to service foreign borrowings in the medium to long-term,” according to the BSP.
The maturity profile of the country’s external debt is still predominantly medium- and long-term or 80.8 percent with original maturities longer than one year.
Short-term accounts or loans with original maturities of up to one year accounted for 19.2 percent. In US dollar terms, this amounts to $15.91 billion which was higher than the previous year’s $13.48 billion.
“The weighted average maturity for all medium and long-term accounts increased to 17.1 years, from 16.8 years during the previous quarter, with public sector borrowings having a longer average term of 21 years compared to 8.5 years for the private sector. This means that FX requirements for debt payments are well spread out and, thus, more manageable,” the BSP explained.
About 59.2 percent of external debt currency mix are in US dollars, the rest are in Japanese yen, and US dollar-denominated multi-currency loans from the World Bank and Asian Development Bank.