Bangko Sentral ng Pilipinas Governor Nestor Espenilla Jr. on Friday said the country’s outstanding external debt as of end-September stood at $76.4 billion, up $4.2 billion or 5.8 percent from the end-June 2018 level of $72.2 billion.
The increase in the debt levels in the third quarter this year was attributed to net availments aggregating $6 billion of both public ($2.2 billion) and private ($3.8 billion) sectors. Its impact was partially offset by the $1.1 billion negative foreign exchange (FX) revaluation adjustments as the US dollar strengthened against third currencies, particularly the Philippine peso ($787 million) and Japanese yen ($262 million).
External debt refers to all types of borrowings by Philippine residents from non-residents, following the residency criterion for international statistics
Transfer of credits from non-residents to residents ($328 million) and adjustments on prior periods’ transactions ($376 million) due to late reporting also partially offset the increase of the external debt stock.
Year-on-year, the debt stock rose by $4 billion, or 5.6 percent, from $72.4 billion in September 2017 as new borrowings exceeded loan repayments by $4.4 billion.
Prior periods’ adjustments ($585 million) and increase in non-resident holdings of Philippine debt papers issued offshore ($195 million) further increased the debt levels, but the negative FX revaluation adjustments ($1.1 billion) partially reduced the upward impact on debt obligations.
The debt stock also grew from the end-2017 level of $73.1 billion (or by 4.5 percent) due largely to net availments ($5.0 billion) by both public and private sectors as the national government (NG) continued to expand financing for its infrastructure development and social spending programs and private firms’ decision to increase working capital, expand funding base and extend term liabilities.
Despite the increase in the foreign obligations, the Philippines’ external debt remain within prudent and manageable levels.
External debt refers to all types of borrowings by Philippine residents from non-residents, following the residency criterion for international statistics.
Private sector foreign borrowings increased during the third quarter of 2018 due to commercial banks issuing notes offshore to diversify sources of liquidity and extend term liabilities.
As of end-September 2018, the maturity profile of the country’s external debt remained predominantly medium- and long-term (MLT) (i.e., those with maturities longer than one year), with its share to total external debt at 82.4 percent.
Short-term (ST) loans (or those with maturities of up to one year) accounted for the 17.6 percent balance of the debt stock and consisted of bank liabilities, trade credits and others. The weighted average maturity of MLT accounts stood at 17.0 years, with public sector borrowings having a longer average term of 21.2 years compared to 7.7 years for the private sector. This means that FX requirements for debt payments are well spread out and, thus, more manageable.
Public sector borrowings stood at $39.5 billion (or 51.8 percent of total debt stock), higher by $1.6 billion from the $38.0 billion level in June 2018. The increase was due mainly from net availments of $2.1 billion as the NG issued JPY154.2 billion (or $1.4 billion) samurai bonds due 2021, 2023 and 2028 and availed $911 million from its multilateral credits.
Private sector debt also grew from $34.2 billion (47.4 percent) during the previous quarter to $36.9 billion (48.2 percent) arising from net availments ($3.8 billion), which was partially offset by the downward FX revaluation adjustments ($767 million) and prior periods’ adjustments ($361 million).
Private sector foreign borrowings increased during the third quarter of 2018 due to commercial banks issuing notes offshore to diversify sources of liquidity and extend term liabilities as well as other private firms’ decision to expand working capital amid strong domestic demand. Joshua Lao