The country’s foreign currency denominated debt total USD125.4 billion as at end-December 2023, higher by USD6.6 billion or 5.5 percent more than three months earlier.
But according to the Bangko Sentral ng Pilipinas (BSP), such debt as percent of local output or the gross domestic product (GDP), the obligations remain manageable at 28.7 percent of GDP from only 28.1 percent three months earlier and only 27.5 percent of GDP at end-2022.
Other key indicators such as the gross international reserves of GIR, a measure of the country’s ability to finance its foreign obligations as they fall due, at USD103.8 billion and enough buffer to support 6.1 times the country’s short-term foreign debt based on original maturity.
“The debt service ratio (DSR), which relates principal and interest payments (debt service burden) to exports of goods and receipts from services and primary income, increased to 10.2 percent from 6.3 percent for the same period last year due to higher recorded principal and interest payments brought about by rising interest rates in 2023. The DSR and the GIR cover for ST debt are measures of the adequacy of the country’s foreign exchange (FX) resources to meet maturing obligations,” the BSP said.
It traced the higher debt to private as well as government entities borrowing USD4.9 billion more on net basis during the period. In the case of the private sector, a non-bank financial institution borrowed USD3 billion from a syndicate of lenders for capital expenditure and refinancing purposes. As for the government sector, the obligations arose from the sale of five-year government bonds from Islamic institutions to underwrite social welfare and infrastructure investment programs.
The positive FX revaluation of borrowings denominated in other currencies as well as the net acquisition of Philippine debt securities by non-residents from residents further increased the debt stock by USD960 million and USD816 million, respectively. The rise in the external debt stock was partially tempered by prior periods’ adjustments of USD98 million, the BSP said.
Year-on-year, the country’s debt stock rose by USD14.1 billion (or by 12.7 percent) from the end-2022 level of USD111.3 billion. The increase was driven by: (a) net availments of US$9.2 billion, bulk of which were net borrowings by the NG (US$7.9 billion); (b) the change in the scope of the external debt to include non-residents’ holdings of Philippine debt securities issued onshore reported in the first quarter of 2023 (US$4.4 billion); and (c) prior years’ adjustments of US$1.2 billion, the BSP said.
