MANILA, Philippines—The Philippines’ outstanding debts to foreign creditors rose as of the end of September as both the government and corporate entities continued to tap the external markets for financing.
Data from the Bangko Sentral ng Pilipinas showed that the country’s outstanding external debt amounted to $62.4 billion by the end of the third quarter, up by 4.4 percent from $59.7 billion as of the same period in 2010.
The BSP said in a report that the increase was due to the fact that fresh loans tapped offshore exceeded the liabilities that were paid.
On a quarter-on-quarter basis, the latest amount of external debt was up by 1.6 percent from $61.4 billion.
Despite the increase in the absolute amount of liabilities, the BSP said the Philippines was able to improve on its capability to meet its obligations.
This is because the country’s resources grew faster than its liabilities.
For instance, the BSP said, the country’s external debt-to-GDP (gross domestic product) ratio improved to 28.4 percent by the end of September from 31.3 percent in the same period in 2010.
Moreover, the proportion of the external debt to the country’s export revenues and remittances likewise fell to 8.3 percent from 8.8 percent over the same period.
“Major external debt indicators remained at comfortable levels,” BSP Governor Amando Tetangco Jr. said in a statement.
He said the improving debt ratios of the Philippines should send a positive signal about the country’s improving credit-worthiness.
The Philippines, which is rated one to two notches below investment grade by major ratings agencies, is hoping for another rating upgrade in 2012.
Early this year, the Philippines enjoyed an upgrade of its credit rating by Moody’s from three to two notches below investment grade. Fitch raised the country’s rating from two to one notch below investment grade.
The BSP also cited the country’s growing reserves of foreign exchange, which it said further indicated its ability to service its obligations to foreign creditors.
The gross international reserves stood at $75.2 billion by end-September, which was 7.3 times the country’s foreign debts maturing within the short term.
The BSP said the country’s foreign exchange reserves have been more comfortable than the minimum indicated by international benchmark. According to this benchmark, reserves are comfortable if these are equal to its debts maturing within the short term.