RP’s foreign debt falls to $53.9b

PHILIPPINE NEWS SERVICE — The Philippines’ outstanding external debt dropped to $53.9 billion at the end of June after the public and private sectors reported net repayments during the period, the Bangko Sentral ng Pilipinas said yesterday.

The end-June foreign debt level was 2.5 percent lower than the $55.3 billion reported at the end of March, or 3.8 percent down from $56 billion registered in the same period last year, central bank data show.

The bank attributed the decline in the country’s external debt to the net repayment on foreign debt by the national government and the private sector.

The government retired $411 million worth of its Brady bonds in May.

The Bangko Sentral said the repayments exceeded $2 billion in the second quarter. The appreciation of third currency denominated liabilities such as the euro and the yen against the dollar and increased investment of foreigners on international Philippine debt papers by $209 million, however, raised the country’s foreign liabilities by $456 million.

The country’s relatively high level of external debt is a concern among its creditors and investors because it makes Manila more vulnerable to external shocks.

The central bank said prepayment of future maturities reached $1.1 billion during the second quarter. The public sector accounted for about $721 million of the prepayment while the private sector contributed $348 million.

The Philippines’ external debt level is roughly equal to 50.7 percent of its domestic output or 46.5 percent of the gross national product, down from 55.1 percent of the gross domestic product ratio reported at the end of last year and 50.8 percent ratio to GNP at the end of December.

The external debt service ratio, or the percentage of the country’s total principal and interest payments to total exports of goods, improved to 11.5 percent in the first semester of the year, well below the international benchmark of 20 percent and better than the 13.3 percent reported in the same period last year.

Government accounts for $26.745 billion of the external debt, representing long-term bonds and loans, while monetary authorities like the central bank contributed $1.235 billion.

Banks account for $8.372 billion of the external debt and other sectors, which include exporters, manufacturers among others, shared $16.02 billion.

The central bank said official creditors such as the Asian Development Bank, the World Bank and the Japan Bank for International Cooperation accounted for 39.6 percent of the country’s external debt while foreign holders of bonds and notes contributed 33.9 percent.

About 89 percent of the country’s external debt were medium- and long-term accounts with original tenors of more than one year and a weighted average maturity of 18 years. Public sector borrowings had a longer average term of 20.5 years, compared to 10 years for the private sector.

The central bank said the second quarter was marked by subdued borrowing activities by both the public and private sectors with gross disbursements on medium- and long-term accounts totaling only $269 million, 77.9 percent of which was accounted for by the national government and other public sector borrowers that were used to finance infrastructure and other priority projects.