The Philippines’ outstanding external debt approved or registered by the central bank declined 0.4 percent in the second quarter of the year from a year earlier.
The Bangko Sentral ng Pilipinas (BSP) said the country’s foreign debt approved or registered by the BSP stood at $58.1 billion as of end-June 2014, down by $236 million from the $58.3 billion recorded in the first quarter of this year.
“The decline resulted mainly from repayments exceeding new borrowings by $593 million; and previous periods’ adjustments due to late reporting of transactions and audit findings (negative $262 million),” the BSP said.
However, the central bank said these were partially offset by increased investments from non-residents in Philippine debt papers ($354 million); and foreign exchange revaluation adjustments ($266 million) arising from the weakening of the US dollar, particularly against the Japanese yen and the Philippine peso.
Compared with a year earlier, the debt stock rose slightly by $96 million as non-residents raised their investments in Philippine bonds and notes issued abroad by $646 million; the full impact of this was partly offset by downward foreign exchange revaluation adjustments; previous periods’ adjustments; and net repayments.
External debt refers to all types of borrowings by Philippine residents from non-residents that are approved or registered by the BSP.
External debt ratios
The central bank said major external debt indicators remained at “comfortable levels” at the end of the second quarter.
It said gross international reserves (GIR) of $80.7 billion as of June 2014 represented cover for short-term debt of 8.4 times under the original maturity concept.
The external debt ratio or outstanding external debt as a percentage of aggregate output (gross national income or GNI) improved to 17.6 percent from 17.9 percent in March 2014 and 18.3 percent a year ago.
“The trend is the same using gross domestic product as denominator, with the gradual recovery of the US economy, favorable domestic business sentiment, and robust inflows of overseas Filipino remittances,” it said.
The BSP added that the external debt service ratio (DSR), or the ratio of total principal and interest payments relative to total exports of goods and receipts from services and primary income, also further improved to 6.8 percent from 7.2 percent in March 2014 and 8.1 percent a year ago.
“The ratio has consistently remained at single-digit levels since 2010, indicating sustained improvement in the country’s capacity to service maturing obligations,” it said.