PH foreign debt burden eased slightly in Q3

MANILA  -The outstanding foreign debt of borrowers in the Philippines, compared to the size of the economy as of end-September, decreased to 28.1 percent from 28.5 percent at end-June, thanks to faster-than-expected gross domestic product growth in the third quarter.

This happened despite an increase in the foreign debt stock by 0.8 percent or $915 million to $118.8 billion from $117.9 billion.

According to the Bangko Sentral ng Pilipinas, the rise in the debt level was due to adjustments in the prior period—such as borrowings made in previous quarters. These adjustments amounted to $2 billion, of which $1.9 billion consisted of borrowings by private nonbank firms.

On the other hand, the increase in the debt stock was partially tempered by: foreign exchange revaluation; the sale of Philippine debt paper to residents by nonresidents; and net repayments.

Further, the country’s foreign borrowings are mostly maturing in the medium to long term (MLT). Of total, 85.6 percent or $101.7 billion was originally maturing after more than a year.

READ: Foreign public, private loans rose 9.5% at end of June

“Relative to the previous (second) quarter, the weighted average maturity for all MLT accounts declined to 17.2 years from 17.3 years,” the BSP said.

Public sector borrowings have a longer average tenor of 20.3 years compared with 7.2 years for private sector obligations.

Government debt to overseas lenders decreased by 1 percent to $73.7 billion at end-September from $74.5 billion at end-June. At the same time, the share of public sector external debt decreased to 62 percent of total from 63.2 percent.

Major lenders

On the other hand, private sector debt increased by 3.9 percent to $45.1 billion from $43.4 billion, with the share rising to 38 percent from 36.8 percent of total.

The biggest lenders to Philippine borrowers were those based in Japan (accounting for $14.8 billion), the United Kingdom ($4.1 billion) and Singapore ($3.3 billion).

Last week, the World Bank released a report with findings that governments across the globe were saddled with surging cost of borrowing as public obligations reach record levels amid high interest rates.

READ: World Bank: Nations’ growing debt burden a rising concern

The World Bank found that, amid the biggest surge in global interest rates in four decades, developing countries spent a record $443.5 billion to service their external public and publicly guaranteed debt in 2022.

The result was that scarce resources were shifting away from critical needs such as health, education and the environment.

“The situation warrants quick and coordinated action by debtor governments, private and official creditors, and multilateral financial institutions—more transparency, better debt sustainability tools, and swifter restructuring arrangements,” World Bank chief economist Indermit Gill said in a statement. INQ