Tho country’s foreign debt total USD118.8 billion as of end-September 2023, up by USD915 million (or 0.8 percent) from USD117.9 billion as of end-June 2023, the Bangko Sentral ng Pilipinas (BSP) said.
But despite the increase in debt stock, the external debt ratio, expressed as a percentage of gross domestic product, improved to 28.1 percent from the previous quarter’s 28.5 percent owing to the economy’s growth during the third quarter.
Other key external debt indicators also remained manageable.
The gross international reserves (GIR) stood at USD98.1 billion as of end-September 2023 and represented 5.7 times cover for short-term (ST) debt based on the original 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, increased to 10.3 percent from 4.8 percent for the same period last year due to higher recorded principal and interest payments in 2023.
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.
The rise in debt level was due to adjustments (i.e., borrowings made in previous quarters) amounting to USD2 billion, of which USD1.9 billion were borrowings by private sector non-bank firms.
The increase in the debt stock from the adjustments was partially tempered by: (a) negative foreign exchange (FX) revaluation of USD655 million; (b) the sale of debt papers to residents by non-residents of USD220 million; and (c) net repayments of USD200 million. The net repayments during the quarter pertain largely to the redemption by two local banks of their maturing medium-term notes (USD900 million).
The country’s debt stock rose by USD10.9 billion (or 10.1 percent). The increase was driven by: (a) total net availments of USD6 billion, the bulk of which were borrowings by the National Government (NG, USD7.8 billion); (b) the change in the scope of the external debt to include non-residents’ holdings of peso-denominated debt securities issued onshore reported in the first quarter of 2023 (USD3.3 billion); (c) adjustments of USD1.5 billion; and (d) positive FX revaluation of USD291 million.
The sale of Philippine debt papers issued offshore by non-residents to residents of USD224 million had a minimal offsetting effect on the year-on-year increase of the debt stock.
As of end-September 2023, the country’s external debt remained predominantly medium- and long-term (MLT) in nature, or those with original maturities longer than one year], with share to total at 85.6 percent (USD101.7 billion).
Relative to previous quarter, the weighted average maturity for all MLT accounts slightly declined to 17.2 years from 17.3 years, with public sector borrowings having longer average tenor of 20.3 years versus 7.2 years for the private sector.
Short term liabilities, or those with original maturities of up to one year, accounted for 14.4 percent of the outstanding debt stock and comprised mainly of bank liabilities, trade credits, and other liabilities.
Of the MLT accounts, 54.6 percent (USD55.5 billion) have fixed interest rates, 43.5 percent (USD44.3 billion) carry variable rates, and 1.8 percent (USD1.9 billion) are non-interest bearing.
Public sector external debt decreased to USD73.7 billion (by USD776 million or 1 percent) in the third quarter, from the previous quarter’s USD74.5 billion level.
Its share to total likewise dropped to 62.0 percent from 63.2 percent a quarter ago. The decline in the public sector debt was due largely to negative FX revaluation of USD553 million and the sale of public sector debt papers by non-residents to residents of USD451 million which offset prior periods’ adjustments of USD123 million and net availment of USD105 million. Some USD67.2 billion (91.1 percent) of public sector obligations were NG borrowings, while the remaining USD6.5 billion pertained to borrowings of government-owned and controlled corporations, government financial institutions and the BSP.
Private sector debt rose by USD1.7 billion (3.9 percent) from USD43.4 billion as of end-June 2023 to USD45.1 billion as of end-September 2023, with its share to total likewise increasing from 36.8 percent to 38.0 percent.
The rise in the debt level was driven mainly by: (a) prior periods’ adjustments of USD1.9 billion arising from the late registration application/reporting of borrowings by various private sector borrowers; and (b) the sale of debt securities by residents to non-residents of USD231 million. Meanwhile, net repayments of USD305 million and negative FX revaluation of USD102 million partially tempered the rise in the private sector debt level.
Major creditor countries were Japan (USD14.8 billion), the United Kingdom (USD4.1 billion), and Singapore (USD3.3 billion).
Loans from official sources [multilateral (USD32.1 billion) and bilateral creditors (USD13.4 billion) had the largest share (USD45.5 billion or 38.3 percent) of the total outstanding debt, followed by borrowings in the form of bonds/notes (USD38.8 billion or 32.7 percent) and obligations to foreign banks and other financial institutions (US$26.7 billion or 22.5 percent); the rest (US$7.8 billion or 6.6 percent) were owed to other creditors (mainly suppliers/exporters).
The country’s debt stock remained denominated in US dollar (USD91.5 billion or 77 percent of total) and Japanese yen (USD9.5 billion or 8 percent of total). The rest (USD17.7 billion or 14.9 percent) pertained to 14 other currencies, including the Philippine peso (6.4 percent), the Euro (4.8 percent), and Special Drawing Rights (3.2 percent).
