Phl external debt down to $74.8 B in 2016

MANILA, Philippines -  The country’s external debt declined by 3.5 percent last year due to the continued strengthening of the US dollar amid the normalization of interest rates by the US Federal Reserve, the Bangko Sentral ng Pilipinas (BSP) reported over the weekend.

BSP Governor Amando Tetangco, Jr. said the outstanding Philippine external debt stood at $74.8 billion last year, lower by $2.7 billion from $77.5 billion in 2015.

Tetangco traced the decline to net principal repayments by both the public and private sectors amounting to $3.4 billion as well as previous periods’ audit adjustments worth $168 million due to late reporting.

The BSP chief also cited the downward foreign exchange revaluation adjustments amounting to $36 million.

However, he explained the full downward impact of these factors on debt stock was partly offset by an increase in non-residents’ investments in Philippine debt papers issued offshore amounting to $846 million.

External debt refers to all types of borrowings by Philippine residents from non-residents, following the residency criterion for international statistics. The debt stock remained largely denominated in US dollar accounting for 65.1 percent and Japanese Yen with 12 percent.

The US dollar-denominated multi-currency loans from the World Bank and the Asian Development Bank represented 12.7 percent of total, while the 10.1 percent balance pertained to 17 other currencies, including Philippine pesos with 6.6 percent, the International Monetary Fund with 2.1 percent, and the Euro with 1.1 percent.

Based on quarter-to-quarter comparison, data showed a 2.4 percent or $1.9 billion decline in the country’s external debt from the end-September level of $76.6 billion.

The BSP chief said the decline in the debt levels during the fourth quarter resulted from the downward foreign exchange revaluation adjustments of $1.8 billion as the greenback strengthened against third currencies.

He also cited the net principal repayments of $611 million mainly by the national government and the Power Sector Assets and Liabilities Management Corp. (PSALM), as well as the prior periods’ audit adjustments amounting to $73 million.

Tetangco said the country’s key external debt indicators remained at comfortable levels as the gross international reserves (GIR) stood at $80.7 billion last year representing 5.6 times cover for short-term debt under the original maturity concept.

About 80.6 percent of the country’s outstanding external debt consisted of medium- and long-term accounts set to mature in over a year. The weighted average maturity of these accounts improved to 16.9 years.

On the other hand, short term accounts with maturities of less than one year comprised the 19.4 percent of the total external debt and consisted mainly of bank borrowings, intercompany accounts of foreign bank branches, trade credits, and deposit liabilities.