Foreign debt down 1.9% as of end-Sept

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THE Philippines’ foreign debt as of the end of the third quarter was lower compared to a year earlier, the Bangko Sentral ng Pilipinas said over the weekend.

At $75.6 billion, the amount was down 1.9 percent from $77.1 billion as of end-September last year, the central bank reported.

From the previous quarter’ tally of $75 billion, meanwhile, the latest foreign debt total was 0.8 percent higher.

The central bank traced the quarter-on-quarter rise to net availments of $960 million, made mainly by the private sector, and adjustments totalling $419 million that reflected late reporting/corrections to previous periods’ transactions.


These were partially offset by the transfer of Philippine debt papers amounting to $803 million from non-residents to residents amid concerns on the forthcoming interest rate hike in the United States.

The year-on-year decline in foreign debt, meanwhile, was traced to higher investments by residents in Philippine debt papers ($2.4 billion) and negative foreign exchange revaluation adjustments ($1.4 billion) as the US dollar strengthened.

Net availments of $1.9 billion, coupled with previous audit periods’ adjustments of $403 million mitigated the decline, the central bank said.

External debt consists of all borrowings by Philippine residents from non-residents, following the residency criterion for international statistics such as the balance of payments.

Key external debt indicators, meanwhile, were said to have stayed at prudent levels in the third quarter

Gross international reserves of $80.55 billion are enough to cover 5.5 times short-term debt based on original maturity.

The external debt ratio or outstanding external debt as a percentage of total output (gross national income or GNI), meanwhile, improved to 21.5 percent from 21.2 percent three months earlier.

“The same trend was observed using GDP (gross domestic product) as denominator, with the Philippine economy grew by 6 percent during the third quarter of 2015,” the central bank said.

The ratio is an indicator of the country’s capacity to service foreign obligations.

The external debt service ratio (DSR), or the ratio of total principal and interest payments to total exports of goods and receipts from services and primary income, also improved to 5.6 percent in September from 6 percent in June 2015.

The DSR measures the adequacy of the country’s foreign exchange earnings to meet maturing obligations.

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