The Bangko Sentral ng Pilipinas (BSP) has approved $10.58 billion worth of public sector foreign borrowings from January to September this year, down 4.68 percent compared to same time in 2023 of $11.1 billion.
The foreign loans, especially for the third quarter approvals, were mostly for the country's sustainability program, maritime safety and environmental reforms.
The BSP released Tuesday, Oct. 22, the Monetary Board-approved government foreign loans for the third quarter or the months of July to September amounting to $3.81 billion. This was lower than the second quarter BSP-approved foreign loans of $3.90 billion but higher than the $2.87 billion borrowings in the first quarter.
For the third quarter, the $3.81 billion public sector foreign borrowings was 36 percent higher than same time in 2023 of $2.81 billion.
The July to September foreign loans include: $2.50 billion worth of bond issuance to fund the government’s general budget financing and financing/refinancing of assets under the Philippines’ Sustainable Finance Framework; two project loans totaling $535.97 million, broken down as $448.41 million for maritime safety/support and $87.56 million for agrarian reform; and one program loan amounting to $778.59 million to finance a program on economic recovery, environmental protection and climate resilience.
Public sector borrowings need to be reviewed and approved by the BSP’s policy-making arm, the Monetary Board, to make sure foreign debt level continue to be manageable.
The review and approval process is part of the BSP mandate to assess all public sector or government foreign borrowings under Section 20, Article VII of the 1987 Philippine Constitution.
The BSP reiterated that it “promotes the judicious use of the resources and ensures that external debt requirements are at manageable levels, to support external debt sustainability.”
The country’s outstanding external debt as of end-June totaled $130.182 billion, up 10.4 percent from $117.918 billion in the same period in 2023.
Public sector external debt rose by 1.2 percent to $79.83 billion from $78.90 billion as of end-March. Public sector debt accounted for 61.3 percent of total external debt.
Private sector debt, on the other hand, slightly increased by 1.1 percent to $50.36 billion in the second quarter from $49.79 million in the first quarter. It contributed 38.7 percent to the total external debt.
The BSP said the external debt level is still manageable since the external debt ratio vis-à-vis the gross domestic product remained at prudent level at 28.9 percent as of end-June from 29 percent as of end-March.
The debt service ratio, which measures the adequacy of the country’s foreign exchange resources to meet maturing obligations, also improved to 9.5 percent from 11.1 percent same period in 2023 because of the lower debt service payments in the first six months of the year.
The country’s external debt maturity profile remained predominantly medium and long-term loans (MLT) in nature, based on BSP data.
The outstanding MLT borrowings totaled $102.79 billion or about 79 percent of the external debt as of end-June. About $61.73 billion or 55 percent of MLT accounts have fixed interest rates; $49.11 billion or 43.7 percent carry variable rates; and $1.44 billion or 1.3 percent are non-interest bearing.
The outstanding short term debt, on the other hand, amounted to $27.39 billion or 21 percent of the total.