The country’s external debt service burden increased by 16.6 percent to $8.786 billion last year from $7.535 billion in 2020, with a higher principal payments in 2021.
Debt service burden represents both principal and interest payments after rescheduling. The principal and interest payments on fixed medium to long term credits include International Monetary Fund credits, other loans and facilities.
Based on Bangko Sentral ng Pilipinas (BSP) data, principal payments went up by 166 percent to $6.606 billion last year versus $4.948 billion in 2020. These are mostly fixed and revolving short-term liabilities of both banks and non-banks.
Interest payments, meantime, fell to $2.180 billion which was 40.8 percent lower compared to $2.588 billion in 2020. Interest payments do not include prepayments on future years' maturities of foreign loans.
The country’s outstanding external debt stood at $106.43 billion in 2021, up by 8.1 percent year-on-year or from $98.49 billion. External debt on a quarter-on-quarter basis was slightly higher by 0.5 percent from $105.9 billion end-September 2021.
Philippines’ external debt remain at prudent levels in terms of GDP ratio of 27 percent both in 2021 and 2020. As a solvency indicator, the BSP said the low GDP ratio still “indicates the country’s sustained strong position to service foreign borrowings in the medium to long-term (MLT).”
At end-2021, the debt service ratio (DSR) increased to 7.2 percent from 6.7 percent in 2020 from higher payments. The DSR shows the country’s FX adequacy to meet maturing obligations.
Of the $106.43 billion external debt, the public sector accounted for $63.9 billion or 60 percent of the total. This was 9.99 percent higher from 2020’s $58.12 billion.
About $55.4 billion or 86.7 percent of public sector obligations were National Government borrowings while the remaining $8.5 billion were loans of government-owned and/or controlled corporations, government financial institutions and the BSP.
Private sector external debt which accounted for 39.9 percent of the total, increased by 5.25 percent year-on-year to $42.94 billion from $40.37 billion in 2020.