End-June external debt lowest since 2009

The country’s foreign debt stock hit a new low of $72.5 billion at the end of the first half, the Bangko Sentral ng Pilipinas (BSP) said.

Latest BSP data showed that the figure as of June was the smallest since end-2009’s $64.7 billion.

In a statement, BSP Deputy Governor and officer-in-charge Diwa C. Guinigundo said the end-June level of outstanding external debt was 1.8-percent lower than end-March’s $73.8 billion.

“The decline in debt stock during the second quarter was brought about by $1.2-billion net repayments, largely by the private sector, and an increase in residents’ investments in Philippine debt papers issued offshore of $110 million,” Guinigundo explained.

The outstanding foreign debt dropped by a faster 6.7 percent from the year ago level of $77.7 billion.

Guinigundo attributed the year-on-year drop to the following: $2.7 billion in net principal repayments by both the government and the private sector; previous periods’ adjustments worth negative $1.4 billion due to late reporting; and negative foreign exchange revaluation adjustments amounting $1.2 billion arising from a stronger US dollar against currencies such as the peso and the Japanese yen.

The end-June debt service ratio (DSR) also eased to 6.6 percent from a quarter ago’s 8.8 percent “due to higher receipts and lower payments during the 12-month period of July 2016 to June 2017,” Guinigundo added.

The DSR, or the share of the debt service burden comprised of interest and principal payment to goods exports as well as receipts from primary income and services, measures the adequacy of a country’s forex earnings to meet maturing obligations.

“The DSR has also consistently remained well below the international benchmark range of 20-25 percent,” Guinigundo noted.