BSP: PH external debt still at ‘prudent levels’

THE country’s external debt ratios remained at manageable levels at the end of last year despite additional borrowings, the Bangko Sentral ng Pilipinas (BSP) said late on Friday.

External debt totaled $125.4 billion last year, up from $111.27 billion in 2022. Gross domestic product (GDP), meanwhile, expanded to $436.6 billion in 2024 from the year-earlier $404.3 billion.

As a percentage of GDP, external debt picked up to 28.7 percent from 27.5 percent at the end of 2022.

The country’s debt service ratio (DSR), meanwhile, rose to 10.2 percent from 6.3 percent as rising interest rates led to increases in principal and interest payments.

Gross international reserves (GIR) stood at $103.8 billion, equivalent to 6.1 times cover for short-term (ST) debt and up from 2022’s $96.15 billion.

“The DSR and the GIR cover for ST debt are measures of the adequacy of the country’s foreign exchange (FX) resources to meet maturing obligations,” the central bank explained.

The rise in external debt was said to be largely due to net availments of $4.9 billion by both private and public sector borrowers.

The three months of 2023, in particular, saw a non-bank firm secure a $3.0-billion syndicated loan that was utilized for capital expenses and to fulfill existing obligations, the BSP noted.

The national government, meanwhile, launched an inaugural $1-billion, 5.5-year dollardenominated Sukuk bond to fund general financial needs, infrastructure projects and social welfare programs.

Positive foreign exchange revaluations of debt denominated in other currencies, as well as net purchases of Philippine debt securities by non-residents, also increased the country’s debt stock by $960 million and $816 million, respectively.

Adjustments from previous periods amounting to $98 million partially offset the rise in external debt.

Year-on-year, the country’s debt stock increased by $14.1 billion or 12.7 percent, which the BSP said was due to national government net borrowings of $7.9 billion, a change in the scope of external debt to include non-residents’ holdings of Philippine debt papers in the first quarter of 2023 ($4.4 billion), and prior years’ adjustments of $1.2 billion.

External debt remained predominantly medium- and long-term (MLT) as of the end of last year, with a share to the total of 86.4 percent.

The weighted average maturity for all MLT accounts narrowed to 16.7 years as of end-December from 17.2 years relative to three months earlier, with public sector borrowings having a longer average tenor of 19.6 years than the 7.7 years for the private sector.

ST liabilities, or those having initial maturities of up to one year, took up 13.6 percent of existing debt stock and were mainly composed of bank liabilities, trade credits and other liabilities.

Meanwhile, 54.9 percent of MLT accounts were said to have fixed interest rates, 43.4 percent carried variable rates, and 1.7 percent were non-interest bearing.

Public sector external debt increased to $77.8 billion in the fourth quarter from $73.7 billion three months earlier, with the share to the total slightly rising to 62.1 percent from 62.0 percent.

National government borrowings comprised $71.0 billion (91.2 percent) of public sector obligations, while the remaining $6.8 billion came from state firms, government financial institutions, and the BSP itself.

Private sector debt, meanwhile, rose to $47.6 billion as of end-December 2023 from $45.1 billion three months earlier. Its percentage to overall debt, however, declined to 37.9 percent from 38.0 percent.

Most of the recorded availments came from a rise in reported short-term liabilities of local banks ($1.1 billion) and borrowings by private sector nonbank entities ($1.0 billion).

The increase in private sector debt was partially offset by the sale of Philippine debt securities by non-residents to residents ($114 million) and adjustments from previous periods ($101 million).

Japan ($15.6 billion), China ($4.7 billion) and the United Kingdom ($4.2 billion) were the country’s top creditors.

Loans from official sources — $33.1 billion multilateral and $15.2 billion bilateral — accounted for the largest share of total outstanding debt at 38.5 percent. Bonds and notes ($40.9 billion or 32.7 percent), obligations to foreign banks and other financial institutions ($28.7 billion or 22.9 percent), and other creditors ($7.5 billion or 6.0 percent) followed.

The Philippines’ debt stock remained primarily denominated in dollars ($94.5 billion or 75.3 percent) and yen ($11.3 billion 9.0 percent), while 15.6 percent was in 18 currencies, including the euro (4.7 percent), Philippine peso (6.9 percent), and special drawing rights (3.1 percent) with the International Monetary Fund.