Philippines external debt hits $119 billion in 9 months

MANILA, Philippines — The Philippines’ external debt hit an all-time high of $118.83 billion in end-September due to higher borrowings by the national government as well as statistical adjustments, according to the Bangko Sentral ng Pilipinas.

BSP data showed the foreign debt of the Philippines climbed by more than 10 percent during the nine-month period from a year-ago level of $107.91 billion.

The BSP said the year-on-year increase in the country’s debt stock was driven by the total net availments of $6 billion, the bulk or $7.8 billion of which were borrowings by the national government.

The central bank also cited the change in the scope of the external debt to include non-residents’ holdings of peso-denominated debt securities issued onshore reported in the first quarter amounting to $3.3 billion.

According to the BSP, other factors that led to the increase in the country’s foreign debt stock include prior periods’ adjustments of $1.5 billion and positive foreign exchange revaluation of $291 million.

The BSP added that the sale of Philippine debt papers issued offshore by non-residents to residents amounting to $224 million had a minimal offsetting effect on the year-on-year increase of the debt stock.

For the third quarter alone, the country’s external debt inched up by 0.8 percent from $117.9 billion in the same quarter last year due to the previous period’s adjustments amounting to $2 billion made mostly by private sector non-bank firms.

Despite the increase, the BSP said the country’s external debt to gross domestic product ratio improved to 28.1 percent in end-September from 28.5 percent in end-June due to the stronger-than-expected GDP growth in the third quarter.

The maturity profile of the country’s external debt remained predominantly medium and long-term in nature, with original maturities longer than one year with share to total at 85.6 percent, at $101.7 billion, while short-term accounts with maturities of up to one year comprised the 14.4 percent balance.

According to the BSP, public sector external debt declined by one percent to $73.7 billion in the third quarter from the previous quarter’s $74.5 billion, translating to a lower share of 62 percent from 63.2 percent.

More than 91 percent of public sector obligations were national government borrowings, while the remaining $6.5 billion pertained to loans of government-owned and controlled corporations, government financial institutions and the BSP.

During the quarter, private sector debt increased by 3.9 percent to $45.1 billion from $43.4 billion as of end-June, with share to total likewise decreasing to 38 percent from 36.8 percent.

Major creditor countries include Japan ($14.8 billion) followed by the United Kingdom ($4.1 billion) and Singapore ($3.3 billion).

Borrowings from multilateral lending institutions and bilateral creditors accounted for the largest share with 38.3 percent, followed by loans in the form of bonds or notes with 32.7 percent, and obligations to foreign banks and other financial institutions with 22.5 percent.

The remaining 6.6 percent came from other creditors, such as suppliers and exporters.

In terms of currency mix, the country’s debt stock remained largely denominated in dollar with 77 percent, followed by the Japanese yen with eight percent.

The national government borrows heavily from foreign and domestic creditors to finance the country’s budget deficit as it spends more than what it actually earns.

The BSP added that the country’s gross international reserves stood at $98.1 billion as of end-September, representing 5.7 times cover for short-term debt.