Foreign debt rises 7.3% to $61.4 B

MANILA, Philippines – The country’s foreign debt climbed 7.3 percent to $61.4 billion in the first half of the year from $57.3 billion a year ago on the back of an upward foreign exchange revaluation due to the general weakness of the dollar against major currencies, Bangko Sentral ng Pilipinas (BSP) Governor Amando M. Tetangco Jr. said yesterday.

However, Tetangco said the ratio of the country’s external debt to gross domestic product (GDP) eased to 28.8 percent as of end-June this year from a year-ago level of 31.2 percent.

“Major external debt indicators remained at comfortable levels at the end of the second quarter,” Tetangco stressed.

He added that the end-June level was $476 million higher than the end-March level of $60.9 billion. External debt refers to all types of borrowings by Philippine residents from non-residents that are approved or registered by the BSP.

According to him, the year-on-year increase in external liabilities could be attributed to the net availments of $3.4 billion and the upward foreign exchange revaluation adjustments of $2.4 billion as other currencies strengthened against the dollar.

He explained that the $1.7-billion increase in resident investments in Philippine bonds and notes issued abroad during the last 12 months reduced foreign debt by the same extent.

Data showed that loan repayments exceeded loan availments but the country’s external debt increased in the second quarter due to upward foreign exchange revaluation adjustments of $533 million as the greenback weakened against other major currencies such as the Japanese yen thereby increasing the debt figure in US dollar terms.

The BSP said official creditors consisting of multilateral institutions and bilateral creditors cornered 43.3 percent of the total followed by foreign holders of bonds and notes with 36.9 percent, and foreign banks and other financial institutions with 13.3 percent. The balance of 6.6 percent were mainly foreign suppliers or exporters.

US dollar-denominated accounts cornered a 47.7 percent share of the country’s total external debt followed by the Japanese Yen with 28 percent while multi-currency loans from international lenders including the Asian Development Bank (ADB), the World Bank, among others accounted for 10.2 percent.

The external debt profile remained predominantly medium to long-term in nature or those with maturities longer than one year accounting for about 88.4 percent of the country’s total external debt. The weighted average maturity of medium to long-term debt was 22.7 years.

On the other hand, short-term external debt consisting largely of trade credits and inter-bank borrowings represented 11.6 percent of the total debt stock. –Lawrence Agcaoili (The Philippine Star)