The country’s foreign debt stood at US$D130.18 billion as of end-June 2024, up by US$D1.49 billion or 1.2 percent from the USD128.69 billion as of end-March 2024. But the external debt as a percentage of local output or the gross domestic product remains at a prudent level, slightly improving to 28.9 percent from 29.0 percent last quarter.
Other external debt indicators, the Bangko Sentral ng Pilipinas said, also remained at comfortable levels.
The gross international reserves (GIR) stood at USD105.19 billion as of end-June 2024 and represented 3.84 times cover for short-term (ST) debt based on the remaining maturity concept. 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, improved to 9.5 percent from 11.1 percent for the same period last year due to lower debt service payments in the first half of 2024. The DSR and the GIR cover for short term debt are measures of the adequacy of the country’s foreign exchange (FX) resources to meet maturing obligations.
According to the BSP, the increase in the debt was driven by net availments aggregating USD1.50 billion as the national government (NG) raised USD2.61 billion from the issuance of a USD2.00 billion dual tranche fixed rate global bonds under its Sustainable Finance Framework and USD611.81 million borrowings from official creditors.
Adjustments of USD493.28 million due to late reporting/registration by borrowers as well as net acquisitions of Philippine debt securities by non-residents from residents aggregating USD238.80 million also contributed to the rise in the debt level.
The increase in the debt stock was dampened by the negative US$736.65 million FX revaluation of borrowings denominated in other currencies brought about by US dollar appreciation.
The country’s debt rose by USD12.26 billion or by 10.4 percent from the end-June 2023 level of USD117.92 billion due the net availment of USD10.36 billion, of which USD5.83 billion were borrowings by private sector entities, largely by banks for general corporate expenditures and liquidity purposes.
The net acquisition of Philippine debt securities by non-residents of USD2.04 billion and prior years’ adjustments of US$1.22 billion further contributed to the increase in debt stock. The negative FX revaluation of borrowings denominated in other currencies amounting to USD1.36 billion tempered the rise in the debt level over the 12-month period.
As of end-June 2024, the maturity profile of the country’s external debt remained predominantly medium to long term (MLT) in nature. Under the remaining maturity concept, outstanding MLT borrowings stood at USD102.79 billion with its share to total at 79.0 percent. The outstanding short term (ST) debt under the remaining maturity concept comprised 21 percent, or USD27.39 billion, of the total outstanding foreign debt.
Public sector external debt grew by USD922.95 million, or 1.2 percent, to USD79.83 billion in the second quarter this year from USD78.90 billion level in the first quarter. Its share to total was recorded at 61.3 percent.
The increase in public sector borrowings was driven mainly by total net availments of USD1.75 billion as the NG tapped international capital markets and various official creditors to increase funding for its infrastructure projects and social services programs. The growth in public sector borrowings was partially offset by the negative USD635.28 million FX revaluation of borrowings denominated in other currencies, net disposition of by non-residents of debt securities amounting to USD159.58 million and prior periods’ adjustments of USD29.58 million.
About USD73.22 billion (or 91.7 percent) of public sector obligations are attributed to the NG, while the remaining USD6.61 billion,or 8.3 percent, pertained to borrowings of government-owned and controlled corporations, government financial institutions and the BSP.
Private sector debt rose to USD50.36 billion at the end of the second quarter of 2024 with its share of total debt recorded at 38.7 percent. The USD567.15 million (or 1.1 percent) increase from the end-March 2024 level of US$49.79 billion was due mainly to prior periods’ adjustments of USD522.86 million and the net acquisition by non-residents from residents of corporate debt securities amounting to USD398.39 million. Net repayments of USD252.73 million and negative FX revaluation of borrowings denominated in other currencies of USD101.37 million tempered the increase.
Major creditor countries were Japan (USD14.25 billion), the Netherlands (USD4.31 billion), and the United Kingdom (USD4.17 billion).
Loans from official sources [multilateral (USD34.73 billion) and bilateral creditors (USD15.41 billion)] had the largest share (USD50.14 billion or 38.5 percent) of the total outstanding debt, followed by borrowings in the form of bonds/notes (USD43.38 billion or 33.3 percent) and obligations to foreign banks and other financial institutions (USD29.11 billion or 22.4 percent); the rest (USD7.56 billion or 5.8 percent) were owed to other creditors (mainly suppliers/exporters).
The country’s debt stock remained largely denominated in US (USD100.19 billion or 77.0 percent of total) and Japanese yen (USD10.02 billion or 7.7 percent of total). The rest (USD19.97 billion or 15.3 percent) pertained to 17 other currencies, including the Philippine peso (USD9.81 billion or 7.5 percent), the Euro (USD5.57 billion or 4.3 percent), and Special Drawing Rights (USD3.74 billion or 2.9 percent).
