PH foreign debt stock rose to $119B in Q1

MANILA  -The Philippines’ outstanding foreign debt, compared to the size of the domestic economy, rose to 29 percent at the end of March from 27.5 percent at the end of last year, which the Bangko Sentral ng Pilipinas (BSP) said was still at a prudent level.

External debt or all borrowings by Philippine residents from non-residents increased by 6.8 percent or $7.5 billion to $118.8 billion as of end-March from $111.3 billion as of end-December.

In a statement, the BSP said the increase was due to a change in the scope of the external debt stock, to include non-resident holdings of peso-denominated debt securities issued onshore.

“The statistical adjustment, which resulted from the availability of detailed information on non-resident holdings of said securities, is in line with the International Monetary Fund’s standards under the

External Debt Statistics Guide and the International Balance of Payments and International Investment Position Manual, 6th edition for external debt reporting,” the central bank said.

This change added $3.8 billion to the foreign debt stock. Other factors that also contributed to the growth in the debt stock include borrowings for the national government’s general financing needs, funding of pandemic recovery measures and other infrastructure programs, among others.

In particular, there was the $3-billion sovereign issuance of a multi-tranche global bond for its general financing requirements. The appreciation of other currencies against the US dollar also increased the US dollar equivalent of Philippine borrowings denominated in other currencies by $432 million.

As of the end of the first quarter, the maturity profile of the country’s external debt remained predominantly medium- and long-term (MLT) in nature. This means that original maturities are longer than one year. MLT loans represent 85.4 percent of total foreign debt.

Of the MLT accounts, 57.7 percent have fixed interest rates, 40.9 percent carry variable rates and the balance of 1.5 percent accounts are non-interest bearing.

Public sector debt

In the first quarter, public sector external debt jumped by 11.6 percent to $75.2 billion from $67.4 billion three months earlier.

“This increase raised its share to total vis-à-vis private sector external debt from 60.1 percent to 63.3 percent,” the BSP said.

About 90 percent or $68.1 billion of public sector obligations were government borrowings, while the remaining $7.1 billion were loans of government-owned and controlled corporations, government financial institutions and the BSP.

Private sector debt declined by 0.7 percent to $43.6 billion from $43.9 billion in the previous quarter.
The biggest sources of foreign loans were Japan ($14.3 billion), United States ($3.6 billion) and the United Kingdom ($3.2 billion).

Loans from official sources such as multilateral and bilateral creditors had the largest share at 37.9 percent out of the total outstanding debt.

These were followed by borrowings in the form of bonds (35.2 percent) and obligations to foreign banks and other financial institutions (20.9 percent).

Further, the country’s debt stock remained largely denominated in US dollar at 76 percent of total and Japanese yen at 8.3 percent.

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