Philippines’ outstanding external debt increased by 10.4 percent to $130.182 billion as of end-June this year versus $117.918 billion in the same period last year as the private sector borrowed more for additional capital.
Based on data from the Bangko Sentral ng Pilipinas (BSP), the debt stock was up by $12.26 billion on a year-on-year basis due to some $10.36 billion net availments. Of this amount, $5.83 billion were loans taken out by the private sector such as banks for general corporate expenditures and liquidity purposes.
Contributing to the external debt was non-residents’ $2.04 billion net acquisition of domestic debt securities as well as the prior years’ adjustments worth $1.22 billion.
Meanwhile, the $1.36-billion negative foreign exchange (FX) revaluation of borrowings denominated in other currencies curbed the rise in the debt level over the 12-month period, according to the BSP.
On a quarterly basis, the country’s external debt stock went up by 1.2 percent or $1.49 billion from $128.69 billion in end-March.
During the quarter, there were net availments of $1.50 billion from the National Government (NG) which raised $2.61 billion from the following: issuance of $2 billion Dual Tranche Fixed Rate Global Bonds under its Sustainable Finance Framework; and $611.81 million borrowings from official creditors.
The BSP recorded the government’s prior periods’ adjustments of $493.28 million due to late reporting or registration by borrowers which contributed to the debt stock. Likewise, the net acquisitions of debt securities by non-residents from residents worth $238.80 million also added to the debt level.
However, the central bank said a negative $736.65 million FX revaluation of borrowings denominated in other currencies – and with the US dollar appreciation – somewhat tempered the increase in the debt stock during the quarter.
The BSP still considered the level of external debt as manageable. Despite the higher external debt level, 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 (DSR), which measures the adequacy of the country’s FX 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 BSP noted that the maturity profile of the country’s external debt remained predominantly medium and long-term loans (MLT) in nature.
The outstanding MLT borrowings totaled $102.79 billion or about 79 percent of the external debt. 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 amounted to $27.39 billion or 21 percent of the total.
The country’s loans come from official sources, namely: multilateral creditors at $34.73 billion and bilateral creditors at $15.41 billion for a combined 38.5 percent of the total outstanding debt; borrowings in the form of bonds/notes worth $43.38 billion or 33.3 percent; obligations to foreign banks and other financial institutions amounting to $29.11 billion or 22.4 percent; and $7.56 billion or 5.8 percent loans to other creditors.
The debt stock is mostly denominated in US dollars or $100.19 billion, about 77 percent of total outstanding debt. Another 7.7 percent or $10.02 billion are in Japanese yen; $19.97 billion or 15.3 percent are in 17 other currencies including the Philippine peso ($9.81 billion or 7.5 percent), the Euro ($5.57 billion or 4.3 percent), and Special Drawing Rights ($3.74 billion or 2.9 percent) of the International Monetary Fund.
As of end-June this year, public sector external debt rose by 1.2 percent to $79.83 billion in the second quarter from $78.90 billion as of end-March. Public sector debt accounted for 61.3 percent of total external debt.
“The increase in public sector borrowings was driven mainly by total net availments of $1.75 billion as the NG tapped international capital markets and various official creditors to increase funding for its infrastructure projects and social services programs,” said the BSP.
About 91.7 percent or $73.22 billion of public sector loans are NG borrowings while the remaining 8.3 percent or $6.61 billion were loans availed of by government-owned and controlled corporations, government financial institutions and the BSP.
Private sector debt, on the other hand, slightly increased by 1.1 percent to $50.36 billion in the second quarter from $49.79 billion in the first quarter. It contributed 38.7 percent to the total external debt.
The BSP said private sector debt went up mainly because of prior periods’ adjustments of $522.86 million and the net acquisition by non-residents from residents of corporate debt securities worth $398.39 million. There were also bet repayments of $252.73 million and negative FX revaluation of $101.37 million.
At the moment, the Philippines’ major creditor countries are still Japan with $14.25 billion; the Netherlands with $4.31 billion; and the United Kingdom with $4.17 billion.