By Joann Santiago
MANILA, July 27 (PNA) — The Philippine government has taken advantage of the still low interest rate environment in the first four months of 2014 by prepaying some of its foreign liabilities.
Bangko Sentral ng Pilipinas (BSP) data show that the government paid in advance some USD 81.6 million worth of foreign currency-denominated debt from January to April this year.
This is about 3,785 times the USS 2.10 million the government prepaid in the same four months in 2013.
One of the factors for this ability of the government can be traced to improved fiscal situation as revenue collection continue to expand.
On the other hand, the Philippines’ private sector posted a decline in its prepayment during the four-month figure with the 2014 level at USD 4.60 million, down from the USD 1.61 billion same period in 2013.
These advanced payments totalled to USD 86.2 million, lower than the USD 1.62 billion same period in end-April 2013.
The government has been prepaying its debt and urging the private sector to the take advantage of the resiliency of the local currency and the high liquidity environment in the local front to pay in advance their foreign –currency denominated debt.
This is to not only to lessen both the government’s and the private sectors’ debt but also to reduce their foreign exchange exposure.
Domestic fundamentals continue to improve enabling both the government and the private sector to benefit from the situation.
In 2013, the country received investment grade ratings from the three major debt watchers namely Fitch Ratings, Standard & Poor’s (S&P) and Moody’s Investors Service.
These upgrades benefited some large corporations and banks among others since they also got their respective investment grade ratings.
These also led to increased investors’ confidence to the economy making both the government and the private sector take out loans at a lower interest rate. (PNA)