Foreign debt drops to $58.3B in March

MANILA, Philippines - The country’s outstanding foreign debt fell further in the first quarter of the year, the Bangko Sentral ng Pilipinas (BSP) said.

Outstanding external debt, or borrowings by Philippine residents from non-residents registered with the central bank, amounted to $58.3 billion as of end-March, less than the $59 billion recorded in the same period last year.

The latest figure is also slightly below the $58.5 billion level in end-2013.

The BSP said this was a result of an increase in non-resident investments in Philippine debt papers issued abroad, foreign exchange revaluation adjustments as the US dollar weakened particularly against the Japanese yen, and adjustment to previous periods’ transactions.

“Key external debt indicators remained at prudent levels in the first quarter of the year,” the BSP Governor Amando M. Tetangco Jr. said in a statement.

The external debt ratio or outstanding external debt as a percentage of aggregate output (gross national income or GNI) reflected sustained improvement, declining to 17.9 percent from 19.1 percent a year ago. The same trend is observed using gross domestic product (GDP), with the ratio down to 21.5 percent in March 2014 from 22.8 percent last year as the Philippine economy continued to grow.

The central bank also noted that the external debt service ratio, or the percentage of total principal and interest payments to exports of goods and receipts from services and income improved to 6.5 percent in end-March from eight percent last year.

Bulk or 81.9 percent of the total outstanding debt had medium- to long-term maturities or those payable in more than a year. The remaining 18.1 percent were made up of short-term external debt which consisted mostly of trade credits and bank borrowings.

Public sector borrowings went up to $40.8 billion in the first quarter, while private sector borrowings summed up to $17.6 billion.

Multilateral and bilateral creditors had the largest exposure in the first quarter at 37.4 percent, while foreign holders of bonds and notes had an exposure of 35.9 percent.

Foreign banks and other financial institutions had a 18.3 percent exposure, while foreign suppliers and exporters accounted for the remaining 8.4 percent.

With regard to currency mix, more than half or 52.9 percent were dollar-denominated debt, while 19.3 percent were in Japanese yen. Multi-currency loans from the World Bank and the Asian Development Bank made up 12.4 percent of the total credit, while the remaining 15.4 percent were in 18 other currencies.