PH foreign debt still manageable, says BSP

Benjamin Diokno

The Philippines’ total outstanding external debt remained a prudent level as of the end of September with $105.93 billion representing 27.3 percent of the domestic economy

The Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno said in a statement the low ratio of total outstanding external debt to gross domestic product (GDP) means that the Philippines sustained a strong position to service foreign borrowings in the medium to long-term.

“The country’s [debt to GDP] ratio remains one of the lowest as compared to other Asean member countries,” Diokno said, adding that other key external debt indicators also remained at prudent levels.

Enough dollar reserves

The country’s gross international reserves were pegged at $106.6 billion as of Sept. 30, representing 8.6 times cover for short-term debt.

In the nine months to September, debt servicing—including principal and interest —was pegged at $7.3 billion or 2.6 percent of GDP.

Increased payments raised the debt service ratio to 8.1 percent of GDP from 7.2 percent in the same period of 2020.

A measure of adequacy of the country’s foreign exchange earnings to meet maturing obligations, this ratio relates principal and interest payments to exports of goods and receipts from services and primary income.

The country’s debt stock swelled by 15 percent year-on-year or by $14 billion from $91.7 billion in the first nine months of 2020.

National government loans

This was mainly due to the national government borrowing $14.3 billion more than the amount it paid.

Of total foreign borrowings, $59.9 billion was owed by the national government and while $8.4 billion was owed by government-owned and controlled corporations, government financial institutions and the BSP itself.

The biggest lender countries were Japan ($14.8 billion), the United States with $2.9 billion, The Netherlands ($2.8 billion), the United Kingdom ($2.4 billion) and China ($2.2 billion).

Borrowings in the form of bonds accounted for the largest share of total outstanding debt at 37.7 percent.

This was followed closely (37.3 percent or total) by loans from official sources—multilateral and bilateral creditors —such as Japan ($8.9 billion), China ($1.4 billion) and France ($701 million). INQ