PH debt service burden eases to 15.5% in November

Published March 2, 2021, 7:00 AM

by Lee C. Chipongian

The central bank-monitored external debt service burden continued its decline, it fell by 15.49 percent year-on-year as of end-November 2020 to $6.452 billion from $7.635 billion.

Based on Bangko Sentral ng Pilipinas (BSP) data, principal payments totaled $4.385 billion, down by 8.53 percent from same time in 2019 of $4.794 billion. Interest payments also dropped by 27.27 percent to $2.067 billion from $2.842 billion.

The debt service ratio and the external debt ratio measures the adequacy of foreign exchange earnings to pay for maturing foreign loans. The debt service ratio relates principal and interest payments or the debt service burden to exports of goods and receipts from services and primary income.

Photographer: Paul Yeung/Bloomberg file

As of end-November last year, the debt service burden ratio to export shipments was at 15.6 percent, while it is 6.5 percent ratio to exports of goods and receipts from services and primary income. The debt service burden to current account is a ratio of 6.2 percent.

The BSP noted that current ratios continue to be on the healthy side and are far from breaking the BSP Early Warning System or EWS on debt sustainability. The central bank remains confident that the debt service ratio will continue to be well below the 17.46 percent danger threshold.

The BSP’s latest external debt data which was as of end-September 2020 indicated a higher external debt position at $92 billion, up 11.25 percent from same period in 2019 of $82.67 billion. There were more foreign loans because of the government’s requirement to fund anti-pandemic programs. About $54.4 billion of external debt are public sector foreign loans.

At the end of 2020, the government has raised $9.97 billion in budgetary support financing from the

Asian Development Bank, the World Bank and the Asian Infrastructure Investment Bank, among others. About two percent of total outstanding external debt is accounted for by the National Government.