Central bank’s Diokno says Philippines’ external debt ‘manageable’

The Governor of Bangko Sentral ng Pilipinas (BSP), Benjamin Diokno. (Photographer: Geric Cruz/Bloomberg)

Bangko Sentral ng Pilipinas (BSP) Governor and new Finance Ministry Secretary Benjamin Diokno assured the public that despite the Philippines’ soaring external debt, it is still at manageable levels.

In a statement on Friday, June 17, Diokno pointed out that the ratio of outstanding external debt (EDT) to the country’s gross domestic product (GDP) was 27.5% at the end of March 2022, which remains l one of the lowest among ASEAN members. country, although slightly higher than the 27% a quarter earlier or at the end of 2021, and at the end of March 2021 at 26.7%.

“The low EDT/GDP ratio indicates the country’s strong and enduring position to service foreign borrowings,” Diokno said.

Diokno also pointed out that the country’s debt service ratio (DSR), or principal and interest payments from exports of goods and receipts from services and primary income, fell from 14.3% to 4 .1% compared to last year, due to the expected decline in reimbursements accompanied by higher receipts.

Other key external debt indicators, such as the country’s gross international reserves – which measure the country’s ability to settle import payments and service external debt – stood at 107.3 ​billions of dollars at the end of March 2022, enough to cover 7.7 times our short-term debt based on the original maturity.

The country’s total external debt, or all types of borrowing by Philippine residents from nonresidents, stood at $109.8 billion at the end of March 2022, an increase of 3.1% or $3.3 billion. compared to $106.4 billion at the end of December 2021.

“The increase in the level of debt during the first quarter of 2022 is due to net drawdowns of $3.5 billion, mainly by the national government (NG) and non-private banks,” Diokno said.

Borrowed funds amounting to $2.3 billion were used by the government for COVID-19 pandemic response programs and other infrastructure projects, with an additional $2.3 billion from of the global bond issue under its 2022 commercial borrowing program.

Private sector borrowing edged down 0.2% from $42.5 billion to $42.4 billion.

The country’s outstanding external debt remained dominated by the US dollar at 55% and the Japanese yen at 9.2%. Meanwhile, multi-currency loans from the World Bank and Asian Development Bank accounted for 21% of total external debt, while the remaining 15% was denominated in 14 other currencies.

Marvin Joseph Ang is a creative news writer who follows developments in politics, democracy and popular culture. He pleads for a free press and a national democracy. The opinions expressed are his own.

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