Foreign debt rises 1.9% in first quarter vs. end-2018

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EXTERNAL debt rose 1.9% quarter-on-quarter to $80.4 billion in the first three months, equivalent to 24% of gross domestic product (GDP), according to the Bangko Sentral ng Pilipinas (BSP).

Year-on-year, external debt rose 9.9%, it said.

External debt includes all types of loans taken on by Philippine residents from non-residents, following the residency criterion for international statistics.

The increase in borrowings from overseas was mainly due to the national government’s raising of $1.5 billion from global bond issues, with net availments amounting to $1.8 billion. The proceeds funded the government’s general financing requirements and the totals also reflect audit adjustments, the central bank said.

“However, the rise in the debt stock was tempered by the increase in residents’ investments in Philippine debt paper including government bonds issued offshore,” the BSP said in a statement.

According to the BSP, borrowing by the government amounted to $40.2 billion, up 1.26% quarter-on-quarter.

“About $33.9 billion (84.5%) of public sector obligations were NG (national government) borrowings while the remaining $6.2 billion pertained to other government agencies’ loans,” the central bank said.

External debt by the private sector totaled $40.3 billion in the first quarter, up 2.5% quarter-on-quarter.

According to the BSP, the major creditors were Japan with $14.4 billion; the US $3.7 billion; the Netherlands $3.7 billion; and the UK $3.4 billion.

Obligations to foreign banks and other financial institutions accounted for 33.2% of the total.

Bilateral sources provided $11.1 billion led by Japan with $8 billion; China $650 million; and South Korea $584 million.

Foreign holders of bonds and notes accounted for 27.7%, while 7.3% was owed to other types of creditors.

The Philippines’ debt stock consisted mostly of dollar debt (61.2%), followed by yen (12.7%).

“Key external debt indicators remained at prudent levels despite the rise in external debt,” the BSP said.

According to the central bank, gross international reserves (GIR) stood at $83.6 billion at the end of first quarter, which represented five times cover for short-term debt.

The debt-service ratio (DSR) improved to 5.1% from 8% in the first quarter of 2018. DSR measures the adequacy of foreign exchange earnings to meet maturing obligations.

The weighted average maturity for all medium and long-term (MLT) accounts declined to 16.8 years from the previous quarter’s 17 years, with public sector loans averaging 21 years compared with the 7.6 years average term for the private sector. — Reicelene Joy N. Ignacio