OUTSTANDING foreign debt fell to $73.1 billion at the end of 2017 from $74.763 billion a year earlier, with the share of foreign debt in the economy falling to under 20%, the Bangko Sentral ng Pilipinas (BSP) said.
Compared with the end of September 2017, debt rose about 1% from $72.4 billion.
Outstanding foreign debt combines all foreign currency-denominated borrowings held by Filipinos, Philippine companies, and the national government from foreigners.
The BSP said the debt increased on a quarter-on-quarter basis due to foreign investors holding more Philippine debt, which it said was an indication of confidence in the economy.
Net principal payments totaled $643 million, which the BSP said “had a dampening effect on debt stock.”
Around 62.4% of the outstanding foreign loans are denominated in dollars, while yen debt accounted for 12.8%.
BSP Governor Nestor A. Espenilla, Jr. said the key external debt indicators “remained at comfortable levels” in 2017.
Foreign debt accounted for 19.4% of gross domestic product (GDP), little changed from a quarter earlier but lower than the 20.4% level for 2016.
GDP grew 6.6% in the three months to December, and 6.7% in 2017.
The BSP considers buffers to be sufficient in the event of a funding crisis, with $81.6 billion in gross international reserves as of end-2017, equivalent to 5.7 times the Philippines’ short-term liabilities.
The debt service ratio (DSR) improved to 6.2% at the end of 2017 from 7% a year earlier. DSR measures the adequacy of foreign exchange earnings to meet maturing obligations.
Loans due in more than a year account for 80.5% of the total debt stock, with medium to long-term maturities averaging 17.3 years.
“Public sector borrowings [had] a longer average term of 23.1 years compared to 7.8 years for the private sector,” the central bank said.
Meanwhile, short-term liabilities, or loans due in less than a year, accounted for 19.5% of the total debt stock, composed of bank dues and trade credits amounting to $14.218 billion.
Public-sector debt accounted for 51.3% of the total debt at $37.5 billion.
Credit obtained from bilateral and multilateral lenders totaled $3.8 billion, while loans from foreign banks and other financial institutions hit $22.5 billion. Notes issued to foreigners hit $21.8 billion, and $5 billion was owed to foreign suppliers and exporters.
The Philippines borrows from both domestic and external sources to help fund its budget deficit and support a growing economy, particularly to support the ambitious P8.44-trillion infrastructure spending plan. — Karl Angelo N. Vidal