PH foreign debt reaches $109B

THE country’s outstanding external debt reached $109 billion at the end of March this year, according to the Bangko Sentral ng Pilipinas (BSP).

It said the actual foreign obligations of P109.8 billion were up $3.3 billion, or 3.1 percent, from the $106.4 billion at the end of December 2021.

“The rise in the debt level during the first quarter of 2022 was due to net availments of $3.5 billion, mainly by the national government and private non-banks,” the central bank noted.

It stated the government raised $2.3 billion from official creditors and $2.3 billion from the issue of global bonds under its 2022 Commercial Borrowings Program to fund its Covid-19 pandemic response initiatives and infrastructure projects. The introduction of its sustainability bond, which intends to finance climate change mitigation and adaptation programs, among other things, is part of the recent offering.

Non-bank private sector borrowers, on the other hand, sought $995 million in external financing to supplement their working capital and fund their projects.

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“Prior periods’ adjustments of $1.7 billion further contributed to the increase in the debt stock,” the BSP said, “while the transfer of Philippine debt papers issued offshore from non-residents to residents of $1.0 billion and negative FX (foreign exchange) revaluation of $841 million tempered the rise in the debt stock.”

The country’s debt stock increased by $12.7 billion year on year, the Bangko Sentral added, which was fueled by net availments of $16.4 billion, mostly from the national government ($12.0 billion), and $3.2 billion in prior period adjustments. Meanwhile, a $5.1 billion transfer of Philippine debt papers from non-residents to locals, as well as a $1.8 billion negative foreign exchange revaluation, somewhat offset the debt stock growth for the period.

The outstanding external debt-to-gross domestic product (EDT to GDP) ratio of the country accelerated to 27.5 percent in end-March 2022 from 26.6 percent a year earlier.

“The ratio remains one of the lowest as compared to other Asean member countries. The low EDT to GDP ratio indicates the country’s sustained strong position to service foreign borrowings,” the central bank said.

As a result of reduced repayments and higher earnings, the country’s debt service ratio (DSR) fell to 4.1 percent from 14.3 percent a year before.

The DSR is a measure of a country’s foreign exchange earnings’ ability to meet maturing liabilities, the central bank said.

The public sector’s external debt widened to $67.4 billion at the end of last year, while private sector debt declined to $42.4 billion.

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