Foreign debt at $77.7B in end-June

The country’s foreign debt stock slightly rose to $77.7 billion as of the end of the first half on the back of a weaker dollar, the Bangko Sentral ng Pilipinas (BSP) said Friday.

In a statement, BSP Governor Amando M. Tetangco Jr. attributed the 0.1-percent quarter-on-quarter increase in the outstanding external debt to “foreign exchange (FX) revaluation adjustments (worth $821 million) as the US dollar weakened, particularly against the Japanese yen.”

Offsetting the marginal rise were net repayments of $680 million, previous periods’ adjustments due to late reporting worth $44 million, as well as the $17-million reduction in non-resident holdings of Philippine debt paper, Tetangco added.

But compared with a year ago, the end-June foreign debt stock was 3.6-percent higher compared with the $75 billion posted in the first half of last year.

The year-on-year increase was mainly due to foreign exchange revaluation, adjustments in previous periods ($2.6 billion) and net availments ($561 million), although partially offset by the $424-million drop in non-resident investments in Philippine debt paper sold overseas.

Tetangco noted that “key external debt indicators remained at comfortable levels” during the second quarter, citing bigger dollar

reserves worth $85.3 billion at the end of the first half, which could cover 5.9 times the country’s short-term debt.

The external debt ratio, a solvency indicator expressing the total outstanding debt as a percentage of the annual aggregate output, improved to 21.7 percent from 21.9 percent a quarter ago, although still higher than the 21.3 percent a year ago.

“Using GDP [gross domestic product] as denominator, the ratio likewise improved to 26.2 percent from 26.5 percent in end-March as the economy posted a 7-percent growth in the second quarter from 5.9 percent in the same period last year,” the BSP said.

The first-half external debt to GDP ratio was nonetheless still higher than the 25.7 percent posted a year ago as the debt stock grew, the BSP added.

The end-June debt service ratio (DSR), meanwhile, slightly increased to 6.2 percent from 6.1 percent a quarter ago, as the debt service burden rose faster than receipts. Ben O. de Vera