FOREIGN debt grew 5.6% year-on-year in the nine months to September as new loans taken on outpaced the rate of repayment, the Bangko Sentral ng Pilipinas (BSP) said in a statement Friday.
The BSP said external creditors were owed $76.4 billion at the end of September up 5.6% from a year earlier.
The central bank also said that the public and private sector availed of $5 billion worth of loans since the start of the year.
It noted that the national government “continued to expand financing for its infrastructure development and social spending programs and private firms’ decision to increase working capital, expand funding base, and extend term liabilities.”
“Despite the increase in the foreign obligations, the Philippines’ external debt remain within prudent and manageable levels,” it added.
The increase in the debt stock was also driven by data adjustments for prior periods from September 2017 amounting to $585 million, and the increase in non-resident holdings of Philippine debt paper issued offshore worth $195 million. However, this was tempered by foreign exchange revaluation adjustments, reducing the debt stock by $1.1 billion.
External debt grew by $6 billion in the third quarter from $72.2 billion at the end of June.
The increase in the debt levels during the third quarter was attributed to net availments of $6 billion, with $2.2 billion coming from the public sector, and $3.8 billion from the private sector.
The BSP also said that debt portfolio was largely composed of medium- and long-term debt at an 82.4% share to the total, with an average maturity of 17 years.
“This means that FX requirements for debt payments are well spread out and, thus, more manageable,” the BSP said.
Public sector external borrowings stood at $39.5 billion, representing 51.8% of the overall debt stock, and $1.6 billion higher from $48 billion in end-June, due to the sale of yen-denominated bonds and multilateral credits.
Total private sector foreign debt meanwhile was $36.9 billion, up from $34.2 billion in the previous quarter after commercial banks issued notes oberseas to diversify sources of liquidity and extend the average term of their liabilities. Other private firms also decided to expand working capital amid strong domestic demand.
Public sector debt has an average maturity of 21.2 years compared to 7.7 years for the private sector.
The BSP also noted that debt service ratio — a measure of the adequacy of foreign exchange earnings to meet maturing debt obligations — was 6.5% at the end of September from 6% a year earlier.
The external debt ratio — or total outstanding debt as a percentage of Gross National Income measures solvency — grew to 19.6% at the end of September from 19.4% a year earlier.
“The ratio indicates the country’s sustained strong position to service foreign borrowings in the medium to long-term. — Elijah joseph C. Tubayan
