PH external debt is higher at $92B end-September

Published December 12, 2020, 6:00 AM

by Lee C. Chipongian

The Philippines’ external debt is higher by 11.25 percent year-on-year to $91.979 billion as of end-September from $82.674 billion, said Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno on Friday.

The debt stock was up by $9.3 billion because of the National Government’s (NG) net availments amounting to $5 billion during the period, and some $2.8 billion transfer of Philippine debt papers from residents to non-residents “as several credit rating agencies affirmed their confidence in the economy during the period,” said the BSP.

Photographer: Paul Yeung/Bloomberg file

The external debt is also higher because of the $936 million positive foreign exchange (FX) revaluation and prior periods’ adjustments amounting to $645 million. The US dollar weakened against other currencies during the period because of the slow  recovery of the US economy  and the ongoing and escalating US-China trade war.

Quarter-on-quarter, the debt stock was higher by 5.2 percent or $4.5 billion from end-June external debt. This was because of the following: $2.8 billion net availments by private non-banks for working capital; and $2.4 billion NG borrowings for COVID-19 pandemic response programs/projects and various infrastructure development projects.

Other reasons were the $636 million positive FX revaluation and the $294 million increase in non-resident investments in Philippine debt papers issued offshore. “The rise in the external debt was partially offset by prior periods’ adjustments of $2.1 billion,” said the BSP.

The total outstanding debt to GDP rose to 25.3 percent as of end-September compared to 23.7 percent end-June this year. At this level, the BSP said the ratio “indicates the country’s strong position to service foreign borrowings in the medium to long-term” and it is also still “one of the lowest as compared to other ASEAN member countries.”

The BSP said the external debt level’s key indicators remained at prudent levels with the buffer fund above $100 billion.

The debt service ratio, which is a measure of FX reserves adequacy, increased to seven percent from 6.4 percent same time in 2019 which indicates that both the public and private sector have enough funds to pay for maturing debts.

As of end-September, public sector external debt stood at $54.4 billion while private sector debt was at $37.6 billion.

The BSP said the Philippines’ major creditor countries were Japan with $15.4 billion of external debt, followed by The Netherlands with $3.2 billion, the US with $3.2 billion and United Kingdom with $2.4 billion.