The country’s debt stock remained at a “comfortable” level in the second quarter as this fell further from the previous quarter. The debt stock the past 10 years, for example, steadily fell from 44.5 percent of local output, or the GDP, in 2007 to only 23.5 percent of GDP as of latest, the Bangko Sentral ng Pilipinas (BSP) said last Friday.
External debt, in essence all types of borrowings by residents from non-Filipino sources, stood at $72.5 billion as of end-June this year, a decrease by $1.3 billion, or 1.8 percent, from the $73.8 billion at end-March.
According to the BSP, the decline in the country’s outstanding external debt resulted from net repayments mostly by the private sector of $1.2 billion and an increase in residents’ investments in Philippine debt papers issued offshore of another $110 million.
On a year-on-year basis, the debt stock dropped by $5.2 billion, or 6.7 percent, from $77.7 billion a year ago.
With this development, the BSP said the current level of external debt remains “at comfortable levels” as the gross international reserves are sufficient to cover 5.6 times the country’s short-term external debt under original maturity.
The external-debt ratio also continued to improve, now at 19.5 percent, from 20 percent in the first quarter.
The ratio is computed by getting the outstanding external debt as a percentage of the country’s gross national income (GNI). The lower the ratio, the bigger the improvement on the economy.
The report also show the country remaining heavily biased toward loans with medium- to long-term tenor, as medium- to long-term debts accounted for 79.9 percent of total external debt for the period.
“This means the foreign-exchange requirements for debt payments are well spread out and, thus, manageable,” the Central Bank said.
Debt-accounts with medium- to long-term tenors are those with maturities longer than one year.
The BSP said the average maturity of medium- to long-tenor accounts stood at 17.9 years as of end-June 2017. In terms of borrower debt profile, public-sector borrowings have a longer average term of 23.7 years compared to only 8.1 years for the private sector.
Short-term liabilities accounted for the remaining 20.1-percent balance of the debt stock. This consisted of bank liabilities, trade credits and other nonbank liabilities.
The bulk of the country’s external debt were in two major currencies, with US dollar debt making up 62.8 percent of the total debt, while the Japanese yen comprised 12.8 percent of the country’s external debt.