For­eign debt ser­vice down 1.23% in June

Manila Bulletin - - Business News - By LEE C. CHIPONGIAN

The coun­try’s ex­ter­nal debt ser­vice bur­den was mostly sta­ble at $3.722 bil­lion as of end-June, just 1.23 per­cent lower from the same pe­riod last year of $3.798 bil­lion.

Based on Bangko Sen­tral ng Pilip­inas (BSP) data, debt ser­vic­ing prin­ci­pal pay­ments slipped to $2.517 bil­lion from $2.526 bil­lion in 2016. In­ter­est pay­ments also was down to $1.205 bil­lion ver­sus same time last year of $1.242 bil­lion.

The debt ser­vice bur­den is the prin­ci­pal and in­ter­est pay­ments on all for­eign debt both pub­lic and pri­vate sec­tor, and by com­put­ing the debt ser­vice ra­tio (DSR) with debt ser­vice bur­den, for­eign debt bor­row­ers show a ca­pac­ity to meet obli­ga­tions. This means there is suf­fi­cient for­eign ex­change earn­ings to pay for ma­tur­ing loans.

At end-June, the DSR im­proved to 6.6 per­cent com­pared to 8.8 per­cent in end-March be­cause of higher re­ceipts and lower pay­ments, ac­cord­ing to the BSP in re­port­ing the ex­ter­nal debt data. The DSR has also con­sis­tently re­mained well be­low the in­ter­na­tional bench­mark range of 20 per­cent to 25 per­cent, the BSP added.

Dur­ing the same pe­riod, the coun­try’s out­stand­ing ex­ter­nal debt amounted to $72.5 bil­lion, about 6.7 per­cent lower year-on-year. On a quar­ter-on­quar­ter ba­sis, ex­ter­nal debt de­clined by 1.8 per­cent or from $73.8 bil­lion.

Pub­lic sec­tor ex­ter­nal debt ac­counted for 51.7 per­cent of the to­tal or $37.5 bil­lion while pri­vate sec­tor debt amounted to $35 bil­lion or about 48.3 per­cent of the to­tal.

About $23.7-bil­lion loans are from mul­ti­lat­eral and bi­lat­eral cred­i­tors while an­other $23.7 bil­lion are loans from for­eign banks and other fi­nan­cial in­sti­tu­tions, both ac­count­ing for 32.7 per­cent each.

A to­tal of $20.3 bil­lion are bor­row­ings in bonds and notes held by non­res­i­dents and $4.8 bil­lion from for­eign sup­pli­ers/ex­porters, ac­count­ing for 28.1 per­cent and 6.6 per­cent re­spec­tively, of to­tal ex­ter­nal debt.

BSP Gover­nor Nestor A. Espe­nilla Jr. has of­ten noted the man­age­able ex­ter­nal debt po­si­tion, as well as the sta­ble ex­ter­nal pay­ments po­si­tion de­spite a “mod­est deficit” be­cause of im­port growth. For 2017, the BSP es­ti­mates a bal­ance of po­si­tion (BOP) short­fall of $500 mil­lion.

“The coun­try’s over­all BOP po­si­tion, nonethe­less, is very man­age­able and can stand re­silient against ex­ter­nal head­winds as we see sta­ble flows from re­mit­tances and re­ceipts from BPO ser­vices as well as in­creas­ing tourism rev­enues and for­eign di­rect in­vest­ments in the years ahead,” he told bankers in a re­cent fo­rum. He re­it­er­ates that the BSP es­ti­mates a mod­er­ate BOP deficit of less than one per­cent of GDP this year.

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