The country’s debt service on its external debt continued to decrease to $5.27 billion in the first nine months of 2022, down by 28.9 percent from $7.42 billion same period last year.
Based on Bangko Sentral ng Pilipinas (BSP) data, as of end-September principal payments totalled $2.72 billion which was 52 percent lower compared to $5.67 billion in 2021.
External debt service interest payments rose by 45.7 percent to $2.55 billion from $1.75 billion same time last year.
The debt service burden, which represents both principal and interest payments after rescheduling, are fixed medium to long term credits which includes International Monetary Fund credits, other loans and facilities. When the government or private sector prepays, these are on loans and bond redemptions or repayments.
The BSP reported last week that as of end-September, the country’s external debt increased by 1.87 percent year-on-year to $107.91 billion or from $105.93 billion in 2021.
In the BSP external debt report, it noted that the debt service ratio or principal and interest payments to exports of goods and receipts from services and primary income, dropped to 5.4 percent at the end of the third quarter compared to 8.2 percent last year due to lower repayments and higher receipts.
The debt service ratio measures the country’s foreign exchange earnings and if it is sufficient to meet maturing obligations.
The $107.91 billion external debt is higher than the gross international reserves or GIR which in September amounted to $93 billion.
In a separate BSP report, it said that the key external debt indicators remain manageable despite that external debt is more than reserves.
The BSP said the decline in the GIR which was accompanied by an increase in short term debt, resulted in a lower GIR to short term ratio of 5.7 times. This was lower than 8.6 times same period in 2021.
“Similarly, the ratio under the remaining maturity concept decreased to 3.7 times,” said the BSP.
Short term liabilities accounted for 15.2 percent of the debt stock, mostly bank liabilities, trade credits and others. The country’s debt maturity profile is 84.8 percent medium to long-term.