The country’s foreign debt stock further declined to $74.763 billion in 2016, a six-year low.
In a statement, Bangko Sentral ng Pilipinas (BSP) Governor Amando M. Tetangco Jr. said the end-2016 outstanding external debt level was 2.4-percent lower than end-September’s $76.6 billion.
BSP data showed that the 2016 figure was also below 2015’s $77.474 billion, and was the lowest since the $73.594 billion recorded in 2010.
Tetangco attributed the quarter-on-quarter drop in external debt to the following: $1.8 billion in downward foreign exchange revaluation adjustments as the US dollar appreciated against other currencies, especially the Japanese yen; $611 million in net principal repayments made by the national government and state-run Power Sector Assets and Liabilities Management Corp. (Psalm); and prior periods’ audit adjustments worth negative $73 million.
“The downward impact of these developments on the debt stock was partially offset by the $591-million transfer of Philippine debt papers from residents to nonresidents, which had the effect of increasing outstanding external debt,” Tetangco said.
As for the year-on-year decline, Tetangco said it was because of a $3.4-billion net principal repayments by both the government and the private sector; negative $168 million in previous periods’ audit adjustments due to late reporting; and $36 million in negative or downward foreign exchange revaluation adjustments.
The year-on-year drop was nonetheless partly offset by an $846-million increase in nonresidents’ investments in government securities, according to Tetangco.
Still, external debt ratio, a solvency indicator expressing the total outstanding debt as a percentage of the annual aggregate output, improved to 20.4 percent at end-2016 from 21.1 percent a quarter ago and 21.9 percent a year ago.
“The same trend was observed using the gross domestic product as denominator, with the Philippine economy growing by 6.6 percent in the last quarter of 2016 and by 6.8 percent for the entire year,” Tetangco added.
The end-2016 debt service ratio (DSR), meanwhile, went up to 6.9 percent from 5.6 percent in 2015, as the debt service burden (DSB) rose faster than receipts.
The DSR measures the adequacy of the country’s FX earnings to meet maturing obligations.