PH external debt service down 28%

The country’s external debt service burden as of end-October 2022 amounted to $5.8 billion, down by 27.5 percent compared to same time in 2021 of $8 billion due to fewer prepayments.

Latest Bangko Sentral ng Pilipinas (BSP) data showed that for the first 10 months last year, principal payments decreased by 53.4 percent to $2.86 billion from $6.13 billion. Principal external debt service are mostly fixed and revolving short-term liabilities. When the government or private sector prepays external debt, these are on loans and bond redemptions or repayments.

Interest payments, meanwhile, increased by 56.7 percent to to $2.95 billion from $1.88 billion same time in 2021.

US dollar/Manila Bulletin article

The debt service burden, which represents both principal and interest payments after rescheduling, are fixed medium to long term credits which include International Monetary Fund credits, other loans and facilities.

As of end-September 2022, the Philippines has an outstanding external debt of $107.91 billion, up by 1.87 percent from same period in 2021 of $105.93 billion.

The external debt level continued to be higher than the country’s gross international reserves (GIR) which dropped to $96.15 billion at the end of 2022 compared to $108.79 billion in 2021. The GIR fell below $100 billion in July last year when the BSP started selling US dollars to prop up the peso.

The country’s external debt as a ratio against gross domestic product (GDP) is equivalent to 26.8 percent, lower than the 27.3 percent same time in 2021.

The BSP said the “low” debt level to GDP ratio which is a solvency indicator, still “indicates the country’s sustained strong position to service foreign borrowings in the medium to long-term.”

As of end-September 2022, the debt service ratio (DSR) stood at 5.4 percent compared to 8.2 percent same period last year due to lower repayments accompanied by higher receipts, said the central bank.

The DSR, which is the debt service burden and other factors, measures the adequacy of the country’s foreign exchange earnings and its capacity to pay its foreign currency loans.

Public sector debt totalled $64.8 billion as of end-September last year. About 87.7 percent or $56.8 billion of public sector obligations were National Government borrowings. Private sector debt amounted to $43.1 billion.