The country’s logged a higher level of total external debt at the end of the third quarter of the year, as private firms and the government took out more foreign loans to fund their response to the COVID-19 pandemic, the central bank said.
In a statement, Bangko Sentral ng Pilipinas (BSP) Gov. Benjamin Diokno said the Philippines’ outstanding external debt stood at $92 billion as of end-September 2020, up by $4.5 billion or 5.2 percent from the $87.5 billion level as of end-June 2020.
The increase in the debt stock during the third quarter was due largely to net availments of $2.8 billion by private non-banks to augment working capital, and $2.4 billion by the government to fund its COVID-19 pandemic response programs and various infrastructure projects.
Further increases to the debt level were due to positive foreign exchange revaluation of $636 million as the dollar weakened against other currencies amid a slowdown in the United States’ economic recovery and escalating US-China tensions during the quarter, and an increase in non-resident investments in Philippine debt paper issued offshore of $294 million. Year-on-year, the country’s debt stock rose by $9.3 billion, which was due to net availments ($5.0 billion) mainly by the government; transfer of Philippine debt paper from residents to non-residents ($2.8 billion) as credit rating agencies affirmed their confidence in the economy; positive foreign exchange revaluation ($936 million), and prior periods’ adjustments ($645 million).
External debt refers to all types of borrowings by Philippine residents from non-residents.
Despite the increase in foreign debts, Diokno said key external debt indicators remained at prudent levels. Dollar reserves stood at $100.4 billion as of end-September, and represented nine times cover for short-term debt based on original maturity. —DAXIM L. LUCAS INQ