THE Bangko Sentral ng Pilipinas (BSP) remained confident that the country’s outstanding external debt ratio remained “at prudent levels” at the end of last year.
In a report over the weekend, the BSP said the Philippines’ outstanding external debt ratio to the country’s gross domestic product (GDP) recorded at 27 percent at end-December 2021.
External debt, which refers to all types of borrowings by Philippine residents from non-residents, stood at $106.4 billion as of end-2021, up by $499 million from the $105.9 billion recorded a quarter earlier.
In end-September last year, the country’s outstanding external debt ratio to GDP stood at 27.3 percent.
The country’s outstanding external debt expressed as a percentage of GDP is a solvency indicator. A low debt-to-GDP ratio indicates the country’s sustained strong position to service foreign borrowings in the medium to long-term (MLT).
The BSP said a rise in the actual debt stock during the fourth quarter was due largely to net availments of $3.4 billion, as private banks borrowed offshore to invest in high quality liquid assets, fund their foreign exchange trading activities and augment their capital, while interest rates are low.
This was partly tempered by the transfer of Philippine debt papers issued offshore from non-residents to residents of $2.4 billion and the negative foreign exchange revaluation of $488 million.
In terms of debt profile, the maturity of the country’s external debt remained predominantly medium-term to long-term in nature, with share to total at 85.8 percent. Medium-term to long-term loans are those with original maturities longer than one year.
On the other hand, short-term accounts, or those with original maturities of up to one year, comprised the 14.2 percent balance of debt stock and consisted of bank liabilities, trade credits and others.
The weighted average maturity for all MLT accounts remained at 17.2 years, with public sector borrowings having a longer average tenor of 20.8 years compared to 7.2 years for the private sector.
“This means that foreign exchange requirements for debt payments are still well spread out and, thus, manageable,” the BSP said.
In terms of currency mix, the country’s debt stock remained largely denominated in US dollar (55.4 percent) and Japanese yen (9.8 percent).
US dollar-denominated multi-currency loans from the World Bank and Asian Development Bank represented 19.6 percent of the total. The 15.2-percent balance pertained to 14 other currencies, including the euro, Philippine peso and Special Drawing Rights.