PHL external debt ‘manageable’ despite rising in Q1, insists BSP

THE Philippines’s ex-ternal debt remains “manageable” accor-ding to the Bangko Sentral ng Pilipinas (BSP), despite rising in the first quarter of the year.

In a report released over the weekend, the BSP said the country’s external debt—which refers to all types of borrowings by Philippine residents from non-residents—stood at $109.8 billion as of end-March 2022, up by $3.3 billion or 3.1 percent from the US$106.4 billion level as of end-December 2021.

BSP Governor Benjamin Diokno said the level remains manageable as the country recorded a 27.5-percent external debt to gross domestic product (GDP) ratio as of end-March 2022.

“The ratio remains one of the lowest as compared to other Asean member countries. The low EDT to GDP ratio indicates the country’s sustained strong position to service foreign borrowings,” Diokno explained.

The BSP attributed the rise in the debt level during the first quarter of 2022 to net availments of $3.5 billion, mainly by the National Government (NG) and private non-banks.

The NG raised $2.3 billion from official creditors to fund its Covid-19 pandemic response programs and infrastructure projects as well as $2.3 billion from the issuance of global bonds under its 2022 Commercial Borrowings Program.

On the other hand, non-bank private sector borrowers sought external credit of $995 million, primarily to augment their working capital and finance their projects.

Prior periods’ adjustments of $1.7 billion further contributed to the increase in the debt stock, while the transfer of Philippine debt papers issued offshore from non-residents to residents of $1 billion and the negative foreign exchange (FX) revaluation of $841 million tempered the rise in the debt stock.

Broken down, the maturity profile of the country’s external debt remained predominantly medium- and long-term (MLT) in nature with the share to total at 87.2 percent. On the other hand, short-term (ST) accounts comprised the 12.8-percent balance of debt stock and consisted of bank liabilities, trade credits and others.

“This means that FX requirements for debt payments are still well spread out and, thus, manageable,” the BSP said.

Public sector external debt increased to $67.4 billion as of end-March 2022 from US$63.9 billion as of end-December 2021. About 87.3 percent of public sector obligations were NG borrowings while the remaining $8.5 billion pertained to loans of government-owned and controlled corporations, government financial institutions and the BSP.

Private sector debt, meanwhile, slightly declined from US$42.5 billion as of end-2021 to $42.4 billion as of end-March 2022, with share to total likewise decreasing from 39.9 percent to 38.6 percent.

The contraction was due to a $2-billion decrease in the liabilities reported by banks, and an increase in resident investments in Philippine debt papers issued offshore of $663 million.

In terms of currency mix, the country’s debt stock remained largely denominated in US Dollar (55.4 percent) and Japanese Yen (9.2 percent).

Multicurrency loans from the World Bank and Asian Development Bank represented 20.8 percent of the total.

The 14.7 percent balance pertained to 14 other currencies, including the Euro, Philippine Peso and Special Drawing Rights.

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