External debt reaches 109.8 billion dollars

MANILA, Philippines – The Philippines recorded a double-digit increase in foreign debt to $109.75 billion at the end of March this year, from $97.05 billion in the same month last year, as the national government borrowed more to fund COVID-19 response measures and fund much-needed infrastructure. projects.

Outgoing Bangko Sentral Governor ng Pilipinas and incoming Finance Secretary Benjamin Diokno attributed the 13.1% year-on-year rise in the country’s stock of debt to $16.4 billion in net revenue, in largely by national government amounting to $12 billion and prior period adjustments of $3.2. billion.

Meanwhile, the BSP said the transfer of Philippine debt securities from non-residents to residents of $5.1 billion along with negative currency revaluation of $1.8 billion partially offset the increase. of outstanding debt.

Quarter-over-quarter, Diokno said external debt rose 3.1% from the end-2021 level of $106.43 billion.

According to the BSP, the rise in the debt level during the first quarter is due to net drawdowns of $3.5 billion, mainly by the national government and non-private banks.

From January to March, the national government borrowed $2.3 billion from official creditors to finance its COVID-19 pandemic response programs and infrastructure projects and raised $2.3 billion through issuing global bonds under its 2022 commercial borrowing program.

The recent issuance includes the launch of a National Government Sustainability Bond, which aims to finance, among other things, climate change mitigation and adaptation projects.

On the other hand, non-banking private sector borrowers requested external credits amounting to 995 million dollars, mainly to increase their working capital and finance their projects.

Prior period adjustments of $1.7 billion further contributed to the increase in the debt stock, while the transfer of Philippine debt securities issued abroad by nonresidents to Philippine residents $1 billion and a negative exchange rate revaluation of $841 million tempered the increase in outstanding debt. .

The country’s external debt has steadily increased from $73.1 billion in 2017, $78.96 billion in 2018, $83.62 billion in 2019, $98.49 billion in 2020 and $106.43 billion in 2021.

Despite the increase, Diokno said the country’s outstanding external debt remained at cautious levels, with its ratio to gross domestic product (GDP) standing at 27.5% in the first quarter of the year.

“The ratio remains one of the lowest compared to other ASEAN member countries,” Diokno said.

Diokno said the country’s gross international reserve (GIR) level stood at $107.3 billion at the end of March, or 7.7 times the short-term debt coverage.

The Philippines emerged from the pandemic-induced recession with GDP growth of 5.7% last year, reversing the 9.6% contraction in 2020 as the economy stalled due to strict COVID protocols -19 and containment measures.

The rebound was sustained with a stronger than expected GDP expansion of 8.3% in the first quarter of the year.

The data showed the debt service ratio fell to 4.1% from 14.3% due to lower scheduled repayments accompanied by higher revenue.

The data shows that public sector external debt rose 5.5 percent to $67.4 billion at the end of March from $63.9 billion at the end of December, accounting for 61.4 percent of the country’s external debt.

The national government accounted for 87.3% or $58.8 billion of total public sector debt, while state-owned and controlled corporations, government financial institutions and the central bank accounted for the remaining 12.7% or $8.5 billion.

Meanwhile, foreign private corporate bonds fell slightly to $42.4 billion at the end of March from $42.5 billion at the end of December for a 38.6% share.

According to the BSP, the main creditor countries are Japan with 14.5 billion dollars, followed by the United Kingdom with 3.7 billion dollars and the Netherlands with 2.9 billion dollars.

Borrowings from multilateral lending institutions and bilateral creditors emerged as the largest share at 37.8%, followed by loans in the form of bonds or notes at 34.6% and obligations to foreign banks and others. financial institutions with 21.5%.

The remaining 6.1% was due to other creditors such as suppliers and exporters.

In terms of currency mix, the country’s outstanding debt remained largely denominated in US dollars at 55.4% and Japanese yen at 9.2%. Multi-currency loans denominated in US dollars from the World Bank and the Asian Development Bank accounted for 20.8%.

The data showed that the maturity profile of the country’s external debt remained predominantly medium to long term in nature with original maturities of more than one year with a total share of 87.2%, while Short-term accounts with maturities up to one year accounted for 12.8%. balance.

“This means that the foreign exchange requirements for debt payment are well distributed and therefore manageable,” Diokno said.

The national government borrows heavily from foreign and domestic creditors to finance the country’s budget deficit, as it spends more than it actually earns.

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