The Philippines’ total external debt (EDT)  rose by $14.1 billion or by 12.7 percent to $125.4 billion in 2023 from the end-2022 level of $111.3 billion, driven by net availments of $9.2 billion, bulk of which were net borrowings by the national government. 

The Bangko Sentral ng Pilipinas attributed the increase to the change in the scope of the external debt to include non-residents’ holdings of Philippine debt securities issued onshore reported in the first quarter of 2023 ($4.4 billion) and prior years’ adjustments of $1.2 billion.

On the other hand, the EDT as of end-December 2023, up by $6.6 billion (or 5.5 percent) from the US$118.8 billion level as of end-September 2023 largely due to borrowings of the private sector.

“Despite the increase in the debt stock, the external debt ratio (EDT expressed as a percentage of gross domestic product) remains at prudent levels, recording at 28.7 percent in the last quarter of 2023 from 28.1 percent in the third quarter of 2023 and 27.5 percent in end-2022,” said the BSP.

Other key external debt indicators also remained at manageable levels. 
Gross international reserves (GIR) stood at $103.8 billion as of end-2023 compared to $95.15 billion in 2022 and represented 6.1 times cover for short-term (ST) debt based on the original maturity concept. 

The debt service ratio (DSR), which relates principal and interest payments (debt service burden) to exports of goods and receipts from services and primary income, increased to 10.2 percent from 6.3 percent for the same period last year due to higher recorded principal and interest payments brought about by rising interest rates in 2023. 

The DSR and the GIR cover for ST debt are measures of the adequacy of the country’s foreign exchange (FX) resources to meet maturing obligations.

The rise in the debt level was due largely to net availments of $4.9 billion by both private and public sector borrowers. 

Private sector borrowings for the quarter were mainly driven by the $3.0 billion availment by a non-bank firm under a syndicated loan from offshore banks. Proceeds from said borrowings were used to finance its capital expenditures and maturing obligations. 

Public sector borrowers, on the other hand, tapped official creditors and the Islamic finance market through the maiden issuance of the National Government’s (NG) $1.0 billion 5.5-year dollar-denominated Sukuk bond to fund general financing requirements, infrastructure projects, and social welfare programs.

The positive FX revaluation of borrowings denominated in other currencies as well as the net acquisition of Philippine debt securities by non-residents from residents further increased the debt stock by $960 million and $816 million, respectively.

The rise in the external debt stock was partially tempered by prior periods’ adjustments of $98 million.

As of end-2023, the maturity profile of the country’s external debt remained predominantly medium- and long-term (MLT) in nature (those with original maturities longer than one year), with its share to total at 86.4 percent or $108.3 billion. 

Relative to previous quarter, the weighted average maturity for all MLT accounts declined to 16.7 years from 17.2 years, with public sector borrowings having longer average tenor of 19.6 years versus 7.7 years for the private sector. 

On the other hand, ST liabilities (those with original maturities of up to one year) accounted for 13.6 percent (or $17.1 billion) of the outstanding debt stock and comprised mainly of bank liabilities, trade credits, and other liabilities.

Of the MLT accounts, 54.9 percent (or $59.4 billion) have fixed interest rates, 43.4 percent (or $47.0 billion) carry variable rates, and 1.7 percent (or $1.8 billion) are non-interest bearing.

Public sector external debt increased to $77.8 billion (or by $4.1 billion or 5.6 percent) in the fourth quarter of 2023 from the previous quarter’s $73.7 billion level. Correspondingly, its share to total slightly increased to 62.1 percent from 62.0 percent a quarter ago. 

The growth in public sector borrowings was driven mainly by the $2.1 billion net availments by NG, followed by the net acquisition of public sector debt securities by non-residents from residents ($930 million) and positive FX revaluation ($898 million).

About $71.0 billion (or 91.2 percent) of public sector obligations were NG borrowings, while the remaining $6.8 billion (or 8.8 percent) pertained to borrowings of government-owned and controlled corporations, government financial institutions and the BSP.

Private sector debt rose to $47.6 billion as of end-December 2023, a 5.4 percent increase from the $45.1 billion level last quarter, despite its share to total slightly decreasing to 37.9 percent from 38.0 percent. 

Bulk of the recorded availments were from the increase in the reported ST liabilities of local banks ($1.1 billion) as well as borrowings by private sector non-bank entities to meet funding requirements (US$1.0 billion). 

The rise in the private sector debt stock was partly tempered by the sale of Philippine debt securities by non-residents to residents of $114 million and prior periods’ adjustments of $101 million.

Major creditor countries were Japan ($15.6 billion), China ($4.7 billion), and the United Kingdom ($4.2 billion).

Loans from official sources (multilateral at $33.1 billion and bilateral creditors at $15.2 billion) had the largest share ($48.3 billion or 38.5 percent) of the total outstanding debt.

This was followed by borrowings in the form of bonds/notes ($40.9 billion or 32.7 percent) and obligations to foreign banks and other financial institutions ($28.7 billion or 22.9 percent); the rest ($7.5 billion or 6.0 percent) were owed to other creditors (mainly suppliers/exporters).

In terms of currency mix, the country’s debt stock remained largely denominated in US dollar ($94.5 billion or 75.3 percent of total) and Japanese yen ($11.3 billion or 9.0 percent of total). 

The rest ($19.6 billion or 15.6 percent) pertained to 18 other currencies, including the Philippine peso (6.9 percent), the Euro (4.7 percent), and Special Drawing Rights (3.1 percent).