PH external debt ratio slid further in 1st quarter
The Philippines at the end of the first quarter posted an even lower external debt ratio, a key indicator of a country’s credit-worthiness.
According to the Bangko Sentral ng Pilipinas, the declining ratio meant that the country is now more capable of servicing its obligations to foreign creditors.
BSP officials said credit watchdogs should take this into account in assessing the Philippines’ credit standing.
In a report released on Friday, the BSP said the external debt ratio, or the combined outstanding foreign debt of government and private entities as a percentage of the country’s gross domestic product (GDP), settled at 27.4 percent in the three months to March. This was an improvement from the 29.5 percent registered in the same period last year.
In the first quarter, the country’s outstanding debt to foreign creditors stood at $62.9 billion. This was about 3 percent more than the $60.9 billion reported in the same period last year.
The external debt ratio dropped because the growth of the economy was much faster than the rise in the amount of foreign debt, the government said.
BSP Deputy Governor Diwa Guinigundo said with the decline in the debt burden, the country’s resources that used to go to debt servicing could now be channeled to other, more vital, expenditures.
Ratings agencies must consider this when they evaluate the country’s credit-worthiness, Guinigundo added.
“The dramatic drop in the country’s debt burden means more resources are available for infrastructure, social protection programs, and other initiatives that can boost economic growth and improve quality of life,” he said.
“This is something credit rating agencies are missing out.”
