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Philippines: foreign debt falls to $72.36B in Q3 – BSP
The country’s foreign debt stock fell to $72.36 billion in the third quarter of 2017, the Bangko Sentral ng Pilipinas (BSP) said on Friday, down $5.6 billion from a year earlier.
Compared to the previous quarter, outstanding external debt was $125 million less, largely due to $805 million in net repayments — mostly by the private sector — and a $91-million increase in residents’ investments in Philippine debt papers issued offshore, which decreased external debt, vis-à-vis a $793 -million increase from adjustments on prior period transactions.
The year-on-year drop, meanwhile, was traced to net principal repayments totaling $2.9 billion, negative foreign exchange revaluation adjustments worth $1.3 billion — arising from the strengthening of the US dollar — and an increase in residents’ holdings of Philippine debt papers issued offshore worth $120 million.
“The peso’s depreciation during the period may have encouraged a shift in borrower preference from foreign to domestic financing to minimize exposure to exchange rate volatility,” the central bank said.
Key external debt indicators remained at comfortable levels during the third quarter of 2017, the Bangko Sentral added, noting that the country’s $81-billion in gross international reserves were enough to pay for 5.7 times short-term debt under the original maturity concept.
The external debt ratio—or the total outstanding debt expressed as a percentage of the annual aggregate output—narrowed to 19.5 percent, improving from 21.1 percent a year earlier.
“The same trend was observed using GDP (gross domestic product) as denominator, with the Philippine economy growing by 6.9 percent in the third quarter of 2017,” the Bangko Sentral said.
The country’s debt service ratio (DSR) also improved to 6.1 percent from 6.7 percent. It also decreased from 6.6 percent as of end-June and was well below the international benchmark range of 20 percent to 25 percent.
The debt service ratio is a measure of the country’s adequacy to meet its obligations, based on foreign exchange earnings, by relating principal and interest payments to merchandise exports and receipts from services and primary income.
About 80.4 percent of the Philippines’ external debt is medium to long-term in nature with maturities of more than one year. This means that foreign exchange requirements for debt payments are well spread out and more manageable, the central bank said.
Of the $72.36-billion in Philippine foreign debt as of the third quarter, 51.4 percent or $37.2 billion was owed by the public sector. The remainder was contracted by banks and companies.
Loans from multilateral and bilateral creditors, and foreign banks and other financial institutions comprised the largest shares of total outstanding debt at 33.2 percent and 30.8 percent, respectively.
Borrowings in the form of bonds/notes held by non-residents accounted for 28.9 percent, while the rest was mostly owed to foreign suppliers/ exporters.
By currency, 61.5 percent of the foreign debt was US dollar-denominated, 123 percent was in Japanese yen, 14.3 percent in multi-currency loans from the World Bank and the Asian Development Bank, and 11.2 percent comprised obligations in 17 other currencies.
Source: http://www.manilatimes.net/ph-foreign-debt-falls-72-36b-q3-bsp/369267/