PH outstanding external debt declines in Q2

BANGKO Sentral ng Pilipinas Officer-InCharge Diwa C. Guinigundo said outstanding Philippine external debt stood $72.5 billion as of end-June 2017, down by 1.3 percent (%) or $1.3 billion from the $73.8 billion end-March 2017 level.

The decline in debt stock during the second quarter was brought about by $1.2 billion net repayments, largely by the private sector, and an increase in residents’ investments in Philippine debt papers issued offshore of $110 million.

On a year-on-year basis, the debt stock likewise substantially dropped by $5.2 billion or 6.7% from $77.7 billion a year ago due to net principal repayments by both the public and private sectors ($2.7 billion); previous periods’ adjustments (-$1.4 billion) due to late reporting; and negative FX revaluation adjustments ($1.2 billion) arising from strengthening of the US Dollar against other currencies, particularly the Yen and the Philippine Peso.

External debt refers to all types of borrowings by Philippine residents from non-residents, following the residency criterion for international statistics.

The external debt ratio or total outstanding debt (EDT) expressed as a percentage of annual aggregate output (GNI), continued to improve, and was recorded at 19.5% from 20% in the first quarter of 2017 and 21.7% a year ago. The same trend was observed using GDP as denominator, with the Philippine economy growing by 6.5% in the

second quarter of 2017. The country’s external debt remained largely medium- to long-term (MLT) in nature and represented 79.9% of total. This means that FX requirements for debt payments are well spread out and, thus, more manageable.

The weighted average maturity of MLT accounts stood at 17.9 years, with public sector borrowings having a longer average term of 23.7 years compared to 8.1 years for the private sector.

Public sector external debt stood at $37.5 billion (51.7% of total debt stock), lower than the previous quarter’s $37.7 billion (51%) due to a $122 million decline in non-residents’ investments in public sector debt papers issued offshore and net repayments of $121 million. About $30.5 billion (81.3% of public sector obligations) of these accounts were NG borrowings.

Private sector debt similarly dropped to $35.0 billion from $36.1 billion last quarter, largely due to net repayments of $1.1 billion.

Loans from official sources (multilateral and bilateral creditors – $23.7 billion) and foreign banks and other financial institutions ($23.7 billion) comprised the largest share of total outstanding debt at 32.7% each. Borrowings in the form of bonds/notes held by non-residents ($20.3 billion) accounted for 28.1%, while the rest ($4.8 billion) were mostly owed to foreign suppliers/exporters.

In terms of currency mix, the country’s debt stock remained largely denominated in US Dollar (62.8%) and Japanese Yen (12.8%). US Dollardenominated multi-currency loans from the World Bank and Asian Development Bank had a 13.9% share to total, while the remaining 10.5% balance pertained to 17 other currencies, including the Philippine Peso (6.5%), SDR (2.2%), and the Euro (1.3%). BSP