Foreign debt at six-year low in 2016

THE COUNTRY’s foreign debt declined in 2016 to a six-year low, the Bangko Sentral ng Pilipinas (BSP) said, as the Philippines settled more of its offshore borrowings and as the stronger dollar pulled the gross amount down from a year ago.

External debt amounted to $74.763 billion last year, dropping from the $ 76.6 billion incurred at end- September and 3.5% less than the $ 77.474 billion posted in 2015, the central bank said in a statement over the weekend.

The figure is also the lowest since the $73.594-billion offshore liabilities recorded in 2010.

The debt stock combines all foreign currency- denominated borrowings held by Philippine residents, companies and the national government.

The lower debt came as the government and private firms settled $ 3.4 billion in principal payments, coupled with adjustments made for the immediately preceding period’s tally that resulted in a reduction of $168 million, the BSP said.

Foreign exchange movements also pulled the debt stock lower by $ 36 million due to revaluation, as the US dollar picked up strength versus Asian currencies. About 65.1% of the country’s external debt is in US dollar, while 12% are denominated in yen.

The peso touched fresh eightyear lows during the last three months of 2016, as the local unit depreciated by 4.19% on average versus the greenback for the full year.

The drop in debt stock was capped by a $ 846- million increase in non- resident investments in Philippine debt papers sold abroad.

With the lower debt stock, its share to the local economy also plunged to nearly a fourth. External debt was equivalent to 24.6% of gross domestic product (GDP) from 26.5% in 2015, the lowest ratio in at least a decade according to central bank data.

Philippine GDP expanded by 6.8% last year, close to the high end of the government’s 6-7% target for 2016.

“Key external debt indicators remained at comfortable levels at the close of 2016,” BSP Governor Amando M. Tetangco, Jr. was quoted as saying in the statement, noting that the central bank remains armed with more than enough buffers. —