The Philippines’ outstanding external debt approved or registered by the central bank recorded a year-on-year decline of 1.2 percent in the first quarter of the year.
Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr. reported that the country’s outstanding external debt approved or registered by the BSP stood at $58.3 billion at end-March 2014 and down by $165 million or 0.3 percent from the $58.5 billion level at the close of 2013.
The decline was attributed to net repayments of $833 million on liabilities of banks, which were, in turn, partially offset by $417 million in non-resident investments in Philippine debt papers issued offshore; foreign exchange revaluation adjustments totaling $169 million as the US dollar weakened, particularly against the yen; and adjustments to previous periods’ transactions accounting for $81 million.
Compared with the same period last year, debt stock dropped by $705 million, or 1.2 percent from $59.0 billion, with $1.3 billion of negative foreign exchange revaluations being offset by higher non-resident investments in Philippine debt papers, net availments totaling $97 million, and adjustment to previous periods’ transactions of $93 million.
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
“Key external debt indicators remained at prudent levels in the first quarter of the year,” BSP’s Tetangco said. Gross international reserves (GIR), which stood at $79.6 billion as of end March 2014, represented 7.6 times cover for short-term (ST) debt under the original maturity concept.
The external debt ratio or outstanding external debt as a percentage of aggregate output (gross national income or GNI) reflected sustained improvement, falling to 17.9 percent from 19.1 percent a year ago.
Similarly, debt as a percentage of gross domestic product (GDP) eased to 21.5 percent in March 2014 from 22.8 percent last year as the Philippine economy continued to grow.
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 (XGSI), further improved to 6.5 percent in March 2014 from 8.0 percent in 2013 due to higher foreign exchange receipts and lower payments during the 12-month period.
The DSR continues to be well below the international benchmark range of 20.0 to 25.0 percent, attesting to the country’s strong liquidity position.
The country’s external obligations remained predominantly medium to long-term (MLT) in nature, comprising 81.9 percent of the total. A high percentage of debt in MLT accounts generally indicates that scheduled debt payments are spread out over a longer period of time, consequently easing cash requirements to meet maturing obligations.
The weighted average maturity for all MLT accounts stood at 20.1 years, with public sector borrowings having a longer average tenor of 22.1 years compared to 9.6 years for the private sector.
Short-term external debt comprised the 18.1 percent balance of debt stock, and consisted largely of trade credits and bank borrowings.
Total public sector debt rose to $40.8 billion in the first quarter of 2014 from $40.5 billion level in December 2013, due to increased non-resident investments in public sector debt papers ($386 million), foreign exchange revaluation adjustments due to the weaker US dollar ($185 million), and adjustments to prior years’ transactions ($25 million). Offsetting these new liabilities were $367 million in net repayments.
In contrast, private sector debt declined from $18.0 billion to $17.6 billion due to net repayments, mainly for bank liabilities.
The creditor profile was essentially unchanged: official creditors (consisting of multilateral and bilateral creditors) continued to have the largest exposure at 37.4 percent of total debt, followed by foreign holders of bonds/notes (35.9 percent), foreign banks and other financial institutions (18.3 percent) and foreign suppliers/exporters (8.4 percent).
The currency composition of external debt remained largely in two major currencies: the US dollar (52.9 percent) and the Japanese yen (19.3 percent). The remaining debt consists of US dollar-denominated multi-currency loans from the World Bank and the Asian Development Bank (12.4 percent), and loans in 18 other currencies (15.4 percent).