Foreign debt shrinks to $77B in 2014

MANILA, Philippines - The country’s external debt dropped to $77 billion in 2014 from $78.5 billion in 2013, the Bangko Sentral ng Pilipinas reported yesterday.

The BSP said it has adopted a new reporting framework for external debt, which now includes borrowings made by the private sector which were not approved by and registered with the central bank and the inter-office accounts of foreign banks in the country.

“Even with the higher debt level brought about by these recent enhancements and modifications, debt indicators were observed to have remained at very prudent levels,” BSP Deputy Governor Nestor A. Espenilla Jr. said.

The external debt ratio or the capacity to repay obligations over a long-term horizon stood at 22.7 percent when measured against the gross national income as of end-2014.

When computed against the country’s gross domestic product, the figure settled at 27.3 percent.

The central bank said the bulk or more than three-fourths of the external debt had medium to long-term maturities or are payable in more than a year. The remaining 20.9 percent were short-term debt, made up mostly of trade credits and bank obligations including deposit liabilities.

Public sector external debt slid to $39.3 billion in end-December from $40.7 billion in end-September last year. The BSP said this was due to negative foreign exchange revaluation adjustments as the dollar strengthened against other currencies.

Private sector external debt, meanwhile, climbed to $38.3 billion from $36.4 billion as borrowings exceeded principal repayments made during the period.

The BSP said almost a third or 32.2 percent of the credit sources were made up of foreign holders of bonds and notes, followed by foreign banks and other institutions at 31.2 percent.

Multilateral institutions and bilateral creditors had 29.7 percent of the total exposure in end-2014, while the remaining 6.9 percent were foreign suppliers and exporters.