Rising foreign debt ‘manageable,’ says BSP

The Philippine economy’s external debt at the end of the third quarter of the year rose slightly compared to last year, thanks to government and private sector borrowings, but the central bank assured that it remains well within the ability of borrowers to service.

In a press statement, Bangko Sentral ng Pilipinas (BSP) Governor Nestor Espenilla Jr. said the country’s outstanding external debt stood at $76.4 billion as of end-September, up by $4.2 billion (or 5.8 percent) from the end-June level of $72.2 billion.

The increase in the debt level during the third quarter of 2018 was attributed to net availments totaling $6 billion of both public ($2.2 billion) and private ($3.8 billion) sectors.

The impact of this development was partially offset by the $1.1 billion in negative foreign exchange revaluation adjustments as the US dollar strengthened against third currencies, particularly the Philippine peso ($787 million) and Japanese yen ($262 million).

Transfer of credits from nonresidents to residents ($328 million) and adjustments on prior periods’ transactions ($376 million) due to late reporting also partially offset the increase in the external debt stock.

Year-on-year, the debt stock rose by $4 billion, or 5.6 percent, from $72.4 billion in September 2017 as new borrowings exceeded loan repayments by $4.4 billion.

Prior periods’ adjustments ($585 million) and increase in nonresident holdings of Philippine debt paper issued offshore ($195 million) further increased the debt level, but the negative foreign exchange revaluation adjustments ($1.1 billion) partially reduced the hike.