Foreign debt rises to $77.7 B

MANILA, Philippines - The country’s outstanding external debt rose 3.6 percent in the first half due largely to foreign exchange adjustments, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.

BSP Governor Amando Tetangco Jr. said the country’s external debt stood at $77.72 billion in end-June, $2.72 billion higher than the $74.99 billion booked in end-June last year.

The rise was traced to the $2.6 billion foreign exchange revaluation and other adjustments as well as $561 million from net availments. This was partly mitigated by the $424 million decline in non-resident investments in Philippine debt papers issued offshore.

External debt refers to all types of borrowings by Philippine residents from non-residents. About 63 percent of the country’s external debt is denominated in US dollar while 12.5 percent is in Japanese yen.

Furthermore, US dollar-denominated multi-currency loans from the World Bank and Asian Development Bank accounted for 12.5 percent while 7.1 percent was peso-denominated, 2.2 percent from the special drawing rights of the International Monetary Fund (IMF) and the Euro with 1.2 percent.

Despite the increase in the first half, Tetangco said the country’s key external debt indicators remained at comfortable levels.

Latest data released by the BSP showed the country’s gross international reserves (GIR) hit a new all-time high of $85.9 billion in end-August and its enough to cover six times for short-term debt under the original maturity concept.

Tetangco said the debt service ratio increased to 6.2 percent in end-June from 5.9 percent in end-June last year as the country’s debt service burden rose to $6.3 billion from $6.1 billion, while receipts inched up to $100.8 billion from $100.3 billion.

 “The debt service ratio has consistently remained at single digit level since 2010 and well below the international benchmark of 20 to 25 percent,” he said.

The debt service ratio serves as a measure of adequacy of the country’s foreign exchange earnings to meet maturing obligations.

About 81.3 percent or $63.2 billion 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 stood at 17.1 years.

“This means the foreign exchange requirements for debt payments are well spread out and, thus, manageable,” Tetangco said.