External debt service down 6% end Q3

Published December 22, 2019, 12:00 AM

by manilabulletin_admin

By Lee C. Chipongian

Philippines’ debt service burden on its external loans dipped six percent year-on-year to $6.085 billion as of end September from $6.474 billion last year, data from the Bangko Sentral ng Pilipinas (BSP) said.

The external debt service principal payments also fell 16 percent to $3.743 billion from $4.337 billion same time last year.

Interest payments, in the meantime, went up by 14.27 percent to $2.442 billion versus $2.137-billion end-third quarter in 2018.

The BSP earlier reported the country’s total external debt stock of $82.7 billion which was up 8.2 percent year-on-year from $76.4 billion in the previous year.

BSP Governor Benjamin E. Diokno said external debt was higher due to net availments amounting to $5 billion, foreign exchange (FX) revaluation adjustments of $1.2 billion, and prior periods’ adjustments worth $812 million.

Public sector external debt was at $42.5 billion as of end-September from $42.3 billion as of end-June. The private or corporate sector borrowed $40.2 billion during the quarter, more than $39 billion in the previous quarter.

Diokno said the external debt to GDP ratio which was 23.7 percent means that the Philippines continue to have “sustained (and a) strong position” to pay for its foreign loans in the medium to long-term. The GDP ratio is only slightly higher than same time last year of 23.5 percent. External debt to gross national income, on the other hand, improved to 19.7 percent from 19.9 percent in 2018.

The country’s debt service ratio as it relates to debt service burden is a measure of adequacy of the country’s FX earnings to meet maturing obligations.

External debt service burden represents principal and interest payments but does not include prepayments on future loan maturities. The principal and interest payments are on fixed medium to long-term credits, loans and new money facilities. Interest payments also include fixed and revolving short-term liabilities of both banks and non-banks.

According to the BSP, the debt service ratio as of end-September was better at 6.4 percent compared to seven percent same time last year. “The debt service ratio has consistently remained at single-digit levels,” it added.