OUTSTANDING external debt held by the Philippines last year reached its highest level since at least 2012, as the government incurred massive borrowings for its pandemic response.

Preliminary data from the Bangko Sentral ng Pilipinas (BSP) released on Saturday showed external debt stood at $98.488 billion as of end-2020, up 17.8% from the $83.618 billion as of end-2019, and up 7.1% from the $92 billion as of end-September.

This is also the highest since at least 2012, based on available central bank data.

The end-2020 external debt level is equivalent to 27.2% of the country’s gross domestic product (GDP), rising from 25.3% as of end-September and the 22.2% ratio seen in 2019.

“The external debt-to-GDP ratio remains relatively lower compared to similarly rated countries globally,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a text message.

Meanwhile, the debt-service ratio (DSR), which relates principal and interest payments to exports of goods and receipts from services and primary income, edged up to 6.3% in 2020 from 6.7% in 2019. The DSR is a gauge of adequacy of the country’s foreign exchange earnings in relation to meeting its maturing debt obligations.

The central bank in a statement said the increase in the external debt stock was attributed to higher borrowings to fund the government’s pandemic response and infrastructure projects.

“Foreign exchange revaluation of $544 million further contributed to the increase in the debt stock as the dollar weakened against other currencies which may be attributed to expectations of continued stimulus in the United States, among others,” the BSP added.

External debt includes all types of borrowings by residents from non-residents.

The October to December period saw both the public and private sector borrowings reach $7.9 billion. In addition, the government raised $2.8 billion from global bonds and $733-million net availments from official sources.

With this, external debt by the public sector reached $58.1 billion as of end-December from $54.4 billion in the previous quarter. The bulk or about $51.9 billion were National Government borrowings, while $6.3 billion were debt secured by government-owned and -controlled corporations, government financial institutions and the BSP.

Meanwhile, private sector debt inched up to $40.4 billion from $37.6 billion as of end-September, fueled by borrowings worth $3 billion and $1.7 billion by banks and quasi-lenders, respectively, in the fourth quarter.

The BSP identified Japan ($15.9 billion), United States ($3.4 billion), United Kingdom ($3.3 billion), and The Netherlands ($3 billion) as major creditor countries.

For Mr. Ricafort, further reopening of the economy once the pandemic is better contained will be helpful for the external debt profile. This could translate to higher tax collections and would limit the rise in the country’s local and external debt stock, he added.

“The National Government signaled recently to increase the ratio of local borrowings vis-a-vis foreign borrowings that could help reduce foreign exchange risks,” Mr. Ricafort said.

Government officials are eyeing an 85:15 financing mix this year, in favor of domestic borrowings, against the pre-pandemic 75:25 ratio. — Luz Wendy T. Noble