Foreign debt slips to $73.8 B in March

MANILA, Philippines -  The country’s foreign obligations decreased 4.9 percent in the first quarter as key external debt indicators remained at comfortable levels, the Bangko Sentral ng Pilipinas (BSP) reported over the weekend. 

BSP Governor Amando Tetangco Jr. said the outstanding Philippine external debt stood at $73.8 billion in the first quarter, lower by $3.8 billion from $77.6 billion in the same quarter last year. 

Tetangco traced the decline to net principal repayments by both the public and private sectors amounting to $2.1 billion as well as previous periods’ audit adjustments worth $1.5 billion due to late reporting. 

The BSP chief also cited the downward foreign exchange revaluation adjustments amounting to $383 million in end-March.   

However, he explained the full downward impact of these factors on debt stock was slightly offset by a modest increase in non-residents’ investments in Philippine debt papers issued offshore amounting to $126 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 dollar, accounting for 63.4 percent and Japanese yen with 12.6 percent.  

The dollar-denominated multi-currency loans from the World Bank and the Asian Development Bank represented 13.6 percent of the total, while the 10.5 percent balance pertained to 17 other currencies, including the Philippine peso with 6.6 percent, the International Monetary Fund with 2.1 percent, and the euro with 1.2 percent. 

Based on quarter-to-quarter comparison, data showed a 1.3 percent or $958 million decline in the country’s external debt from the end-December level of $74.8 billion. 

The outgoing BSP chief said the decline in the debt levels during the first quarter was due to prior periods’ adjustments amounting to $673 million due to late reporting and the transfer of Philippine debt papers to residents worth $497 million. 

He also cited the net principal repayments made by the public and private sectors amounting to $255 million. 

These, he explained, were offset by the positive foreign exchange revaluation adjustments amounting to $466 million as the Japanese yen strengthened against the dollar during the period. 

Tetangco said the country’s key external debt indicators remained at comfortable levels as the gross international reserves (GIR) stood at $80.9 billion in the first quarter, representing 5.4 times cover for short-term debt under the original maturity concept. 

He pointed out the country’s debt service ratio (DSR) has remained at single digit level of 8.7 percent in the first quarter from 9.2 percent in the same quarter last year. 

The ratio, however, was higher than the 6.9 percent booked in end 2016 due primarily to bond redemptions at maturity by the national government amounting to $523 million, two universal banks with $575 million, a mining company with $300 million, and a telecom provider with $228 million. 

Tetangco said the DSR remains well below the international benchmark range of 20 to 25 percent.

About 79.6 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 17.4 years. 

On the other hand, short term accounts with maturities of less than one year comprised the 20.4 percent of the total external debt and consisted mainly of bank borrowings, intercompany accounts of foreign bank branches, trade credits, and deposit liabilities.