PH external debt hits $106.4 billion – Manila Bulletin

The Philippines’ external debt stock increased by 8.1% or $7.94 billion to $106.43 billion in 2021 from $98.49 billion in 2020, including public sector debt accounted for the bulk of foreign loans.

Based on a Bangko Sentral ng Pilipinas (BSP) report, the year-on-year increase in external debt stems from $9.8 billion in net drawdowns, mostly from the National Government (NG) and prior period adjustments of $3.8 billion.

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“These were partially offset by the $3.7 billion increase in resident investment in foreign-issued debt securities and the $2 billion negative revaluation of FX (foreign exchange) as the U.S. dollar was strengthening against other currencies such as the Japanese yen and the euro,” the BSP said.

External debt on a quarterly basis increased slightly by $499 million or 0.5% from $105.9 billion at the end of September 2021. There were net drawdowns of $3.4 billion.

“Private banks have borrowed abroad to invest in high-quality liquid assets, finance their currency trading activities and increase their capital, while interest rates are low,” the BSP said. This was partly offset by the following: transfer of Philippine debt securities issued abroad by non-residents to residents of $2.4 billion; and a negative currency revaluation of $488 million.

Last year, of the external debt of $106.43 billion, the public sector accounted for $63.9 billion, or 60% of the total. Public sector external debt at end-December was 9.99% higher from $58.12 billion in 2020.

BSP said approximately $55.4 billion or 86.7% of public sector bonds were NG borrowings while the remaining $8.5 billion were loans from publicly owned and/or government-controlled companies. State, government financial institutions and PASB.

Private sector external debt, meanwhile, rose 5.25% year-on-year to $42.94 billion, from $40.37 billion in 2020. It accounted for 39.9% of the total.

External debt remains at prudent levels in terms of GDP ratio of 27% in 2021 and 2020. As an indicator of solvency, the PASB said that the low GDP ratio “still indicates the strong and sustained position of the country to service medium-term foreign loans. term (MLT).

At the end of 2021, the debt service ratio (DSR) fell from 6.7% in 2020 to 7.2% due to higher payments. The DSR shows the adequacy of the country’s currencies to meet maturing obligations.

The debt service burden, on the other hand, was $8.78 billion in 2021, up 16.6% from $7.53 billion in 2020. Principal payments totaled $6.60 billion, down from $4.95 billion in 2020, while interest payments were $2.18 billion, down from 2020. $2.59 billion.

The maturity profile of external debt is still “mostly MLT in nature or those with original maturity over one year, with a total share of 85.8%”.

“This means that the foreign currency needs for debt payment are still well distributed and manageable,” the BSP reiterated.

The weighted average MLT maturity was 17.2 years, with public sector borrowings having a longer duration of 20.8 years compared to the private sector’s 7.2 years. Short-term liabilities, on the other hand, accounted for 14.2% of outstanding debt and consisted of bank liabilities, trade credits and others.

The main creditor countries of the country remain Japan with 14.6 billion dollars, the United States with 3.8 billion dollars, the United Kingdom with 2.8 billion dollars and the Netherlands with 2.8 billion. of dollars.

Japan also leads as a creditor of official loans or loans negotiated in the form of multilateral and bilateral loans with $8.7 billion, followed by China with $1.5 billion and France with $677 million. dollars, among others.

Multilateral and bilateral loans accounted for 37.2% of total external debt, while borrowings in the form of bonds accounted for 34.7% and 22.3% were obligations to foreign banks and other financial institutions.

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Shirlene J. Manley