Foreign debt service down 1.23% in June
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.