PH’s external debt service up 23% in third quarter – Manila Bulletin

The country’s external debt service burden stood at $ 7.31 billion at the end of September, 23 percent more than the $ 5.94 billion for the same period in 2020, according to data from Bangko Sentral ng Pilipinas (BSP).

The debt service burden represents both principal and interest payments after rescheduling. BSP said principal and interest payments on medium and long-term fixed credits include credits from the International Monetary Fund, loans covered by the Paris Club and commercial bank rescheduling, and new monetary facilities. .

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At the end of the third quarter, principal repayments of the external debt stood at $ 5.56 billion, up 36.94% from $ 4.06 billion in the same period last year. . Principal payments are made on short-term fixed and revolving liabilities of banks and non-banks.

Interest payments, however, continued to decline 6.91% to $ 1.75 billion from $ 1.88 billion in September 2020. Interest payments relate to short-term fixed and revolving liabilities banks and non-banks, but do not include early repayments on future loan maturities.

The country’s external debt stock reached 105.93 billion dollars at the end of September, an increase of 15.16% year-on-year. During this period, the public and private sectors borrowed an additional $ 14 billion in foreign loans.

External debt ratios remain at cautious levels in the third quarter with a GDP ratio of 27.3%, which remains one of the lowest in the region, and a debt service ratio (DSR) of 8 , 1% due to higher payments. The DSR indicates that the country’s foreign exchange earnings are sufficient to meet the repayments of maturing loans, while the external debt-to-GDP ratio is an indicator of solvency.

BSP Governor Benjamin E. Diokno said last week that the Philippines has enough foreign currency to pay for maturing loans despite the looming interest rate hike as it approaches normalization. policies, which could have an impact on foreign exchange reserves.

At the end of November, the BSP was maintaining dollar reserves of 107.67 billion dollars.

At a December 9 Monetary Council meeting, the PASB revised the projection of gross international reserves (GIR) for 2021 down to $ 111 billion from a September 16 estimate of $ 114 billion. The BSP also downgraded the RIF 2022 projection from $ 115 billion to just $ 112 billion.

The central bank said the emerging GIR of 2021 is lower than expected due to “the use of reserves to pay for currency bonds and various expenses.”


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Shirlene J. Manley