THE volatility in the value of global currencies pushed the Philippines’s debt stock against the rest of the world to increase in the first quarter of the year, but the Bangko Sentral ng Pilipinas (BSP) said the increase remains “marginal” compared to its level in end-2017.
External debt—or all the types of borrowings made by Philippine residents across the world—of the country stood at $73.2 billion as of end-March this year, posting a 0.1-percent, or $98-million, increase from the end-2017 level of $73.1 billion.
According to the Central Bank’s report, the “slight increase” in the country’s debt stock during the quarter arose mainly from the positive foreign-exchange revaluation adjustments due largely from the weakened US dollar against the Japanese yen.
The US dollar and the Japanese yen are the two largest currencies in the country’s entire debt stock, with 61.5 percent of the country’s external debt in US dollar and 13.5 percent in Japanese yen.
The BSP said the revaluation adjustments between the two currencies pushed the debt stock higher by $655 million for the quarter.
Prior periods’ adjustments due to late reporting were also part of the culprit behind the higher debt stock for the quarter.
The BSP said the increase in the country’s external debt could have been higher for the quarter, if not mitigated by the $735-million net principal payments of the country, as well as the transfer of Philippine debt papers holdings issued offshore.
Compared to its year-ago figure, however, the BSP pointed out that the country’s debt stock declined by $609 million from $73.8 billion during the period.
Indicators of the country’s ability to pay its remaining external debt, meanwhile, have been trending positive for the quarter, the BSP said.
In particular, the country’s DSR—or the measure of adequacy of the country’s dollar earnings to meet maturing obligations—improved to 7.6 percent, from the 9.1 percent seen in the same period last year.
The international benchmark range for DSRs is between 20 percent and 25 percent. A lower DSR indicates a positive adequacy of its dollar earnings to meet its obligations.
Meanwhile, the Philippines external debt ratio—a solvency indicator—continued to show an improving trend, declining to 19.1 percent from 19.4 percent in the fourth quarter of 2017 and 20 percent a year ago.
The BSP also reported that the country’s external debt profile remains skewed to the medium- to long-term debt, representing 82.4 percent of the total debt stock of the country.
“This means that foreign exchange requirements for debt payments are well spread out and, thus, more manageable,” the BSP said in a statement.
Medium- to long-term accounts are those with maturities longer than one year.