PH foreign debt fell 1.1% to $61.7B in Sept.By Michelle V. Remo
Philippine Daily Inquirer
THE COLLECTIVE debt of Philippine private and government entities to foreign creditors dropped in September from a year ago due to the significant appreciation of the peso against the US dollar.
A report from the Bangko Sentral ng Pilipinas showed that the country’s outstanding liabilities denominated in foreign currencies amounted to $61.7 billion as of the end of September, falling by 1.1 percent from the $62.4 billion recorded in the same period last year.
The slight drop in the country’s foreign obligations came with the appreciation of the peso. The peso rose by about 4.5 percent against the US dollar since the start of the year, thus becoming one of the strongest performing currencies in Asia.
The peso closed at 41.88 against the greenback on the last trading day of September, strengthening from the 43.85:$1 level seen at the end of 2011.
The country’s collective debt is now much less than its total reserves of foreign currencies.
This observation, together with other favorable macroeconomic indicators, raised the country’s chances of attaining an investment grade.
The Philippines’ gross international reserves now stand at about $84 billion.
Also, the drop in the outstanding obligations aided in the further improvement on the country’s debt burden.
The central bank reported that the ratio of the outstanding debt denominated in foreign currencies to the country’s gross domestic product (GDP) settled at 25.6 percent by the end of September, improving from the 28.4 percent registered in the same period last year.
The declining debt-to-GDP ratio, a closely watched indicator of credit worthiness, is often cited as a reason behind expectations that the country will get an investment grade in 2013.
“Major external debt indicators remained strong in the third quarter,” the BSP said in the report.
The Philippines is currently rated a notch below investment grade by Fitch Ratings, Moody’s Investors Service, and Standard & Poor’s (S&P).
The other day, S&P said it revised its outlook on the country’s credit rating from “stable” to “positive,” which means there is a strong likelihood that the rating will be increased within the short term.
Short URL: http://business.inquirer.net/?p=99243