The country’s external debt rose by 10.4 percent to $130.18 billion until June from $117.92 billion a year ago due to mainly continued government borrowings to support infrastructure projects.

The Bangko Sentral ng Pilipinas (BSP) reported the growth reflected a slight increase of 1.2 percent or $1.49 billion in external debt in the second quarter compared to the previous quarter.

Despite the higher debt, the BSP said it remained at a “prudent” level as the external debt ratio expressed as a percentage of gross domestic product improved to 28.9 percent from 29 percent quarter-on-quarter.

Breaking down the total external debt, the public sector borrowings reached $79.83 billion, up by 1.2 percent in the second quarter from $78.9 billion in end-March.

“This was mainly driven by total net availments of $1.75 billion as the National Government tapped international capital markets and various official creditors to increase funding for its infrastructure projects and social services programs,” BSP said in its report.

In May, the government awarded $2-billion Dual Tranche Fixed Rate Global Bonds under its Sustainable Finance Framework to mitigate the effects of climate change on vulnerable sectors.

Forex adjustments

However, the BSP said external debt in other currencies was cheaper by $736.65 million due to foreign exchange adjustments caused by the US dollar appreciation.

The bulk or 91.7 percent of $73.2-billion borrowings went to the national government, and the rest, or $6.6 billion was allocated to government-owned and controlled corporations, government financial institutions and the BSP.

Meanwhile, private sector borrowings grew slightly slower by 1.1 percent to $50.36 billion in the second quarter from $49.79 billion in end-March.

The growth mainly stemmed from the $398.39-million net acquisition of domestic corporate debt securities by non-residents.

Major creditors came from Japan with $14.25 billion transferred funds, the Netherlands with $4.31 billion, and the United Kingdom with $4.17 billion.

The Philippines mostly sought US dollar-denominated loans with 77 percent share, followed by the Japanese yen with 7.7 percent.

Domestic borrowers also preferred official sources consisting of multilateral and bilateral creditors for 38.5 percent share or $50.14 billion, followed by bonds and notes with 33 percent or $43.4 billion.

The Department of Finance (DoF) said the government continues to favor domestic loan sources for over 60 percent share compared to external sources.

With higher government revenue collections and improved expenditure management, the DoF projects the fiscal deficit to fall from 5.6 percent this year to 3.7 percent by 2028.