PH foreign debt rose in H1 to $87.5B 

The Philippines accumulated more foreign debt in the first half of the year as the government borrowed more from overseas to fund its response efforts to the coronavirus pandemic, according to the central bank.

In a statement, Bangko Sentral ng Pilipinas Governor Benjamin Diokno said the country’s’ outstanding external debt stood at $87.5 billion at the end of June 2020, up by $6 billion or 7.4 percent, from the $81.4 billion level as of end-March 2020.

“The rise in the debt stock during the second quarter was due to net availments of $2.9 billion, largely attributed to the national government as it raised $2.4 billion from the issuance of global bonds and $3.1 billion from multilateral and bilateral creditors to fund its general financing requirements and COVID-19 pandemic response programs or projects,” he said.

Further increases to the debt level were due to prior periods’ adjustments of $2.1 billion; an increase in nonresidents’ investment in Philippine debt paper issued offshore of $839 million; and positive foreign exchange revaluation of $227 million as the US dollar weakened against other currencies, including the Philippine peso.

External debt refers to all types of borrowings by local entities from foreign ones, following the residency criterion for international statistics.

Year-on-year, the country’s debt stock rose by $6.2 billion, which was brought about by prior periods’ adjustments ($2.7 billion); transfer of Philippine debt paper from residents to nonresidents ($2 billion); net availments ($1.4 billion); and positive foreign exchange revaluation ($89 million).

Diokno explained that despite the increase in the external debt level, key external debt indicators remained at prudent levels.

Gross international reserves stood at $93.5 billion as of end-June 2020 and represented 8.7 times cover for short-term debt under the original maturity concept.