Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno announced that the Philippines’ outstanding external debt stood at US$81.4 billion as of end-March 2020, down by US$2.2 billion (or 2.6 percent) from the US$83.6 billion level as of end-December 2019.
The decline in the debt level during the first quarter was due to net repayments of US$4.0 billion largely attributed to the settlement of short-term (ST) maturing obligations by the private sector.
This was offset by: (a) the US$1.1 billion increase in non-residents’ investments in Philippine debt papers issued offshore, demonstrating investors’ confidence in the country’s creditworthiness; (b) prior periods’ adjustments of US$580 million; and (c) positive foreign exchange (FX) revaluation adjustments of US$101 million as the US Dollar weakened against the Japanese Yen.
Year-on-year, the country’s debt stock rose by US$990 million.
Although net repayments amounted to US$2.2 billion largely by private sector banks ST accounts, this was more than offset by the following: (a) transfer of Philippine debt papers from residents to non-residents (US$2.4 billion); (b) prior periods’ adjustments (US$482 million); and (c) positive FX adjustments (US$266 million).
External debt refers to all types of borrowings by Philippine residents from non-residents, following the residency criterion for international statistics.
External debt ratios
The governor further stated that key external debt indicators remained at prudent levels.
Gross International Reserves stood at US$88.9 billion as of end-March 2020 and represented 6.7 times cover for ST debt under the original maturity concept.
The debt service ratio (DSR), which relates principal and interest payments (debt service burden or DSB) to exports of goods and receipts from services and primary income, is a measure of adequacy of the country’s FX earnings to meet maturing obligations. For January to March 2020, the ratio increased to 8.9 percent from 5.7 percent recorded for the same period a year ago due to higher payments. The DSR has consistently remained at single digit levels.
Total outstanding debt (EDT) expressed as a percentage of Gross Domestic Product (GDP) is a solvency indicator. EDT to GDP ratio decreased (an improvement) to 21.4 percent from 22.2 percent a quarter ago. The ratio indicates the country’s sustained strong position to service foreign borrowings in the medium to long-term (MLT).
The country’s EDT to GDP ratio remains one of the lowest as compared to other ASEAN member countries. (BSP)
