The Philippines' outstanding external debt declined in the second quarter, Bangko Sentral ng Pilipinas data showed.

Likewise, the country recorded a lower EDT to gross domestic product ratio, that is, 26.8 percent from 27.5 percent in the previous quarter.

"The ratio remains one of the lowest as compared to other ASEAN member countries. The low EDT to GDP ratio, a solvency indicator, indicates the country's sustained strong position to service foreign borrowings in the medium to long -term," the report said.

"Other key external debt indicators also remained at prudent levels. Gross international reserves stood at $100.9 billion as of end-June 2022 and represented 7.3 times cover for short-term debt based on the original maturity concept," it added.

Reacting to this, chief economist Michael Ricafort of Rizal Commercial Banking Corp. told Daily Tribune over the weekend that "this was largely because of the faster GDP growth as the economy further re-opened toward greater normalcy, while also reducing the need for more borrowings with no more lockdowns, which have proven to be costly for the government."

"The national government was also prudent in reducing foreign borrowings amid the weaker peso exchange rate in recent months since foreign borrowings entail forex risks (local currency depreciation increases cost of foreign borrowings), learning from the lessons of the Asian financial crisis of 1997," the economist added.

The data also indicated that the debt service ratio dropped to 5.0 percent from 9.5 percent recorded for the same period last year because of lower repayments accompanied by higher receipts.

The DSR, which relates principal and interest payments (debt service burden) to exports of goods and receipts from services and primary income, is a measure of the adequacy of the country's foreign exchange earnings to meet maturing obligations.

EDT, meanwhile, refers to all types of borrowings by Philippine residents from non-residents (following the residency criterion for international statistics).

The BSP data shows that "EDT stood at $107.7 billion as of end-June 2022, down by $2.1 billion (or 1.9 percent) from the $109.8 billion level as of end-March 2022."

The decrease in the debt level during the second quarter of 2022 was mainly because of the negative FX revaluation of $2.0 billion as the dollar strengthened against other currencies amid the Ukraine-Russia conflict and the United States Federal Reserve's recent policy actions to raise interest rates to curb inflation.

Furthermore, the transfer of Philippine debt papers issued offshore (from non -residents to residents) of $613 million and net repayments of $86 million further contributed to the decline in the debt level, reducing the effect of prior periods' adjustments of $598 million.