PH external debt declines anew in June

The country’s outstanding external debt load has declined anew to $75 billion as of end-June this year or 4.6 percent lower compared to $78.6 billion in the same period last year.

The Bangko Sentral ng Pilipinas (BSP), which monitors Philippine residents’ borrowings from non-residents that could be considered as foreign or overseas, said the external debt was lower by about $3.6 billion on a year-onyear basis because of negative foreign exchange revaluation adjustments amounting to $2.6 billion as the US economy continued to "gradually recover which led to the strengthening of the US dollar."

External debt refers to the portion of a country's debt that was borrowed from foreign lenders including commercial banks, governments or international financial institutions. These loans, including interest, must usually be paid in the currency in which the loan was made.

The lower debt level was also attributed to the increase in residents’ investments in Philippine debt papers of $835 million as well as previous periods’ adjustments.

BSP Governor Amando M. Tetangco Jr. said external debt ratios continue to show payment manageability and that there are enough foreign currencies in the financial system to address maturities.

“Key external debt indicators were observed to have remained at very prudent levels in the second quarter of 2015,” Tetangco said.

As of end-June, total external debt is equivalent to 25.7 percent of the country’s gross domestic product. This was lower than the previous year’s 28.7 percent.

Compared to the previous quarter ending in March, external debt has dropped 0.4 percent or by $321 million.

On a quarterly basis, the BSP said debt level declined due to the transfer of domestic debt papers from non-residents to residents amounting $1 billion amid “growing concerns” on the anticipated interest rate hike by the US Federal Reserve.”

The central bank also noted negative foreign exchange revaluation adjustments mainly because of the weakening Japanese Yen against the US dollar.