Foreign debt drops to $51.8 billion as of June

MANILA, Philippines – The country’s external debt as of end-June declined to $51.8 billion from $52.2 billion recorded in March on the back of repayments by the public and private sector, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.

On a year-on-year basis, the total external debt stock reflected a $3-billion drop from the $54.8-billion level recorded in June last year, data from the central bank also showed.

External debt refers to all types of borrowings by Philippine residents from non-residents that were approved by the BSP, which is mandated to manage the foreign debt of both the public and private sector.

“Major external debt indicators remained at prudent levels during the second quarter,” BSP Governor Amando M. Tetangco Jr. said.

Of the $51.8 billion, the total public sector’s external debt remained at $39.3 billion while the private sector’s external debt declined to $12.5 billion from $13.2 billion in March as foreign and local banks continued to repay offshore obligations.

The creditor profile also remained unchanged. Official creditors continued to have the largest exposures at 44.7 percent of total debt, followed by foreign holders of bonds and notes with 34.1 percent. Foreign banks and other financial institutions accounted for 14 percent.

The currency composition of external debt was likewise essentially unchanged. US dollar-denominated accounts represented 51.1 percent of total debt while Japanese yen-denominated accounts comprised 28.5 percent. Multi-currency loans from the Asian Development Bank and the World Bank accounted for 10.4 percent while the rest of the accounts, in 17 different currencies, comprised 10 percent.

On the back of the decline in external debt, the country’s gross international reserves (GIR) remained at comfortable levels. GIR, which stood at $39.5 billion at the close of the second quarter, represented 6.9 times the level of short-term external debt based on original maturity, and reflected an improvement from the levels in June 2008 (4.2 times the level of short-term external debt) and March 2009 (6 times the level of short-term external debt).

Under the remaining maturity concept, the ratio likewise improved to 3.9 times the level of short-term external debt, from 2.9 and 3.4 in June 2008 and March 2009, respectively, due to higher reserves and lower short-term obligations.

Short-term accounts under the remaining maturity concept pertain to obligations with original maturities of one year or less, plus amortizations on medium and long-term accounts falling due within the next 12 months from July 2009 to June 2010. –Iris C. Gonzales (The Philippine Star)