External debt service rises by 11% in Sept.

The country’s external debt service burden was up by 11 percent year-on-year to $5.88 billion end-September, based on Bangko Sentral ng Pilipinas (BSP) data.

Principal and interest payments – minus prepayments on future loan maturities – both rose during the period.

Total principal payments as of end-September increased by 12 percent to $3.79 billion from $3.38 billion same time in 2017.

Interest payments, in the meantime, went up by 9.17 percent to $2.09 billion from $1.92 billion.

The BSP released over the weekend the latest external debt figure which as of end-September, increased by 5.6 percent year-onyear to $76.4 billion. External debt are all types of borrowings by local residents from non-residents after the residency criterion for international statistics.

BSP Governor Nestor A. Espenilla Jr. said that “despite the increase in the foreign obligations, the Philippines’ external debt remain within prudent and manageable levels.”

External debt to GDP stood at 23.5 percent, slightly more than the previous year’s 23.4 percent. The debt service burden to GDP also rose to 2.5 percent at the end of the third quarter versus the previous year’s 2.3 percent.

In a statement over the weekend, the BSP said debt service ratio (DSR), which relates principal and interest payments (debt service burden) to exports of goods and receipts from services and primary income, increased to 6.5 percent from six percent same time in 2017 “due to larger payments made from January to September (but) the DSR has consistently remained at single digit levels, and well below the international benchmark range of 20-25 percent.”

The DSR measures the level of adequacy of the country’s FX earnings to meet maturing debt obligations.