Foreign debt up 2.5% to $53.1 billion in third quarter

MANILA, Philippines – The Bangko Sentral ng Pilipinas (BSP) reported yesterday that the country’s external debt went up by 2.5 percent to $53.1 billion as of end-September this year from $51.8 billion as of end-June this year.

“Major external debt indicators remained at prudent levels by the end of the third quarter,” BSP Governor Amando M. Tetangco Jr. said.

External debt refers to all types of borrowings by Philippine residents from non-residents that were approved or registered by the BSP.

Data released by the central bank showed that total public sector external debt increased to nearly $41 billion as of end-September due to upward foreign exchange revaluation adjustments or $1.1 billion on non-US dollar-denominated accounts arising from the weak greenback.

On the other hand, the country’s private sector external debt declined by $300 million to about $12.2 billion as of end-September from $12.5 billion as of end-June as the growth of loan repayments by corporate borrowers outpaced the growth of loan availments.

Tetangco noted that major external debt indicators continued to improve due to the country’s substantial foreign exchange receipts, comfortable level of international reserves, and sustained growth in national income.

The country’s gross international reserves (GIR) reached a new record high of $42.5 billion as of end-September that was equivalent to 7.6 times the country’s short-term external debt based on original maturity and 3.6 times based on residual maturity.

“Gross international reserves (GIR) were at a historic high of $37.6 billion at the close of the year,” Tetangco said.

The ratio of GIR to short-term external debt improved from 6.9 percent as of end-June this year and from 4.4 percent of as end-September last year.

Tetangco said the BSP also saw further improvement in the external debt service ratio (DSR) which was estimated at 10.7 percent as of end-September from 10.6 percent as of end-June.

This ratio is a measure of the adequacy of the country’s foreign exchange earnings to meet maturing principal and interest payments.

“The DSR has remained well below the 20 to 25 percent international benchmark, indicating that the country has sufficient foreign exchange earnings to service maturing principal and interest payments during the current period. –Lawrence Agcaoili (The Philippine Star)