PH foreign debt dipped in Q1 to $147.35B

MANILA, Philippines – The Philippines’ foreign borrowings modestly declined in the first quarter—remaining at levels the central bank described as “manageable”—amid risk aversion triggered by the Middle East conflict.

Data from the Bangko Sentral ng Pilipinas (BSP) showed the country’s external debt stock, covering both government and private obligations, stood at $147.35 billion as of end-March, from $147.65 billion in the preceding quarter.

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That was equal to 30 percent of gross domestic product, a slight improvement from 30.3 percent in the prior quarter. Year-on-year, foreign debt inched up 0.4 percent, driven by new borrowings by the national government and private sector.

The latest results came amid a prolonged war in the Middle East, which has triggered a historic oil price shock and boosted demand for the US dollar, pressuring the peso. The local currency’s weakness, in turn, could bloat the peso-value of foreign debt held by borrowers like the government and private companies—something that could prompt issuers to defer their offshore borrowing plans.

“The slight quarter-on-quarter decline in external debt was driven by lower nonresident holdings of Philippine debt securities, reflecting more cautious investor sentiment and tighter financing conditions for emerging markets during the quarter,” the BSP said.

Still, the BSP emphasized that the country’s external debt metrics remained within prudent thresholds, providing some buffer against the turbulence shaking global capital markets.

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Short-term external debt due within a year or less stood at $25.5 billion as of March, comfortably covered by $106.64 billion in gross international reserves (GIR). That level of GIR provides 4.18 times cover for short-term obligations—roughly in line with other emerging economies.

Meanwhile, debt service ratio—another indicator of capacity to settle debt by comparing loan payments with the country’s income from exports and other inflows— remained moderate at 9.5 percent, though higher than the 8.5 percent a year earlier. This, the BSP explained, was due to higher principal payments.

Under a presidential order, the BSP is the designated agency for compiling and publishing external debt statistics, a mandate aimed at bolstering transparency. INQ