THE country’s external debt ratios stayed at manageable levels as of the second quarter despite additional borrowings, the Bangko Sentral ng Pilipinas (BSP) reported late on Friday.
External debt totaled $130.18 billion in the April-June period, up from $128.69 billion as of end-March. As a percentage of the economy, external debt slightly improved to 28.9 percent from 29.0 percent in the first quarter.
Gross domestic product (GDP) expanded to $221.47 billion as of end-June 2024 from $208.24 billion a year earlier.
The country’s debt service ratio (DSR), meanwhile, improved to 9.5 percent from 11.1 percent due to lower payments in the first half.
Gross international reserves (GIR) stood at $105.19 billion, equivalent to 3.84 times short-term (ST) debt and up from 2023’s $99.39 billion.
“The DSR and the GIR cover for ST debt are measures of the adequacy of the country’s foreign exchange resources to meet maturing obligations,” the central bank said.
Govt borrowings fuel rise
The increase in debt mainly came from net borrowings totaling $1.50 billion.
This included $2.61 billion raised by the national government through $2.0 billion in global bonds and $611.81 million from official creditors.
“Prior periods’ adjustments of $493.28 million due to late reporting/registration by borrowers as well as net acquisitions of Philippine debt securities by non-residents from residents aggregating $238.80 million also contributed to the rise in the debt level,” the BSP said.
The rise in debt was said to have been minimized by a $736.65-million revaluation of borrowings in other currencies due to the appreciation of the dollar.
Year on year, the country’s debt stock increased by 10.4 percent to $117.92 billion. This was largely due to $10.36 billion in net borrowings, with $5.83 billion coming from private sector entities, mostly banks.
The increase was also boosted by $2.04 billion from non-residents’ purchases of Philippine debt securities and $1.22 billion in prior years’ adjustments.
The rise was limited by $1.36 billion in currency revaluations, the BSP said.
Debt mostly medium, long-term
External debt remained predominantly medium- and long-term at $102.79 billion as of the first six months of the year, with a share to the total of 79.0 percent.
Short-term debt made up 21.0 percent, or $27.39 billion.
For medium- and long-term debt, $61.73 billion (55.0 percent) had fixed interest rates, $49.11 billion (43.7 percent) variable rates, and $1.44 billion (1.3 percent) were non-interest bearing.
In the second quarter, public sector external debt rose by 1.2 percent to $79.83 billion from $78.90 billion in the first quarter, accounting for 61.3 percent of the total.
The increase was mainly due to $1.75 billion in borrowings by the government for infrastructure and social programs, but was partly offset by $635.28 million in currency revaluations, $159.58 million in debt securities sold by non-residents, and $29.58 million in prior periods’ adjustments.
The government accounted for about $73.22 billion (91.7 percent) of public sector debt while government-owned corporations, financial institutions, and the central bank combined had a $6.61-billion (8.3 percent) share.
Private sector debt, meanwhile, picked up to $50.36 billion, or 38.7 percent of total debt, from $49.79 billion at the end of March.
This was due to $522.86 million in prior periods’ adjustments and $398.39 million in net acquisitions of corporate debt securities by non-residents.
It was tempered by $252.73 million in net repayments and $101.37 million in currency revaluations.
Japan is top creditor
Japan ($14.25 billion), the Netherlands ($4.31 billion), and the United Kingdom ($4.17 billion) were the country’s top creditors.
Loans from official sources, including multilateral ($34.73 billion) and bilateral creditors ($15.41 billion), made up the largest share of the total debt at 38.5 percent.
This was followed by bond/note borrowings at $43.38 billion (33.3 percent) and obligations to foreign banks and financial institutions at $29.11 billion (22.4 percent).
The remaining $7.56 billion (5.8 percent) was owed to other creditors, mainly suppliers or exporters.
The Philippines’ debt stock remained primarily denominated in dollars ($100.19 billion, or 77.0 percent) and Japanese yen ($10.02 billion, or 7.7 percent).
The remaining 15.3 percent was spread across 17 other currencies, including the peso (7.5 percent), euro (4.3 percent), and Special Drawing Rights (2.9 percent).
Debt payments rise in July
In a related development, the national government hiked its debt payments in July amid an increase in interest payments, data from the Treasury bureau showed.
At P81.17 billion, debt servicing in July was 26.13 percent higher than the year-earlier P64.36 billion. It was also higher than June’s P66.08 billion.
Broken down, interest payments accounted for the bulk at P79.43 billion, up from P63.55 billion a year ago and the month-earlier P55.64 billion.
The remaining P1.74 billion involved amortization, higher than the P808 million posted in July last year but significantly down from June’s P10.43 billion.
Local creditors still accounted for almost all interest payments at P55.32 billion. This was higher than the P39 billion in July last year and month-earlier P36.66 billion.
It was comprised of fixed rate Treasury bonds (P47.03 billion), retail T-bonds (P3.575 billion), and T-bills (P2.9 billion).
Foreign interest payments, meanwhile, slipped to P24.112 billion in July from P24.548 billion last year. It was, however, higher than June’s P18.979 billion.
For amortizations, P185 million was for domestic debt, while P1.56 billion went to foreign creditors.
Year to date, meanwhile, government debt payments were 40.28 percent higher at P1.36 trillion from January-July 2023’s P972.29 billion.
The national government’s outstanding debt ballooned to a new record high of P15.69 trillion in July.
Of this, 31.46 percent was borrowed abroad while 68.54 percent was sourced domestically.
Domestic debt hit P10.75 trillion while external debt totaled P4.94 trillion.