Philippine foreign debt levels improved in ’14

Foreign debt levels continued to improve at the end of 2014 as the country benefited from currency value adjustments while locals invested more overseas, central bank data showed.

In a statement, the Bangko Sentral ng Pilipinas (BSP) said there was an increase in the absolute amount of external debt held by the country. But as a ratio to gross domestic product (GDP)—considered a more reliable measure of the strain these obligations would have on the economy—external debt was lower.

“Even with higher debt levels, debt indicators were observed to have remained at very prudent levels,” BSP Deputy Governor Nestor Espenilla Jr. said in a statement.

At the end of December, the country’s external debt, which counted money owed by both the government and private sector, reached $77.7 billion—lower by $800 million year-on-year.

Compared with the end-September period, the absolute amount of debt was up $579 million.

The new report reflects a recent change in standards, which now include certain obligations such as capital set aside by foreign banks.

According to the BSP data, the end-year total was equivalent to 27.3 percent of gross domestic product—an improvement from the 27.6 percent seen in September, and 28.8 percent registered in 2013.

The cost of paying for these obligations also improved.

At the end of last year, the country’s debt service ratio, which refers to the amount of money that goes to servicing loans relative to foreign exchange earnings, declined to 6.4 percent from 6.6 percent in September, and 8.2 percent in 2013.