External debt servicing rises 45% in February

External debt service burden that the country pays continue to increase as of end-February to $1.31 billion or up by 45.19 percent from the same period last year of $905 million.

The external debt service burden is one of the key indicators the Bangko Sentral ng Pilipinas (BSP) is using to monitor both the public and private sector’s capacity to pay principal and interests on its external debt after rescheduling.

The end-February total principal payments amounted to $844 million, more than double than that of last year’s $407 million.

BSP data show that interests payments, in the meantime, were mostly unchanged at $469 million compared to the same time in 2015 of $498 million.

The debt service burden excludes payments that do not involve actual outflows such as rescheduling or refinancing of existing debt and conversion of debt into equity.

In 2015, the country's external debt service burden amounted to $5.27 billion from the previous year’s $6.35 billion.

Overall, the country’s outstanding external debt totaled $77.5 billion last year which was lower than 2014’s $77.7 billion.

The BSP reported that in 2015 the public and private sector’s combined principal debt service payments reached $2.74 billion, which was lower than 2014’s $3.57 billion. Interest payments also declined to $2.53 billion compared to the previous year’s $2.78 billion.

According to the central bank, the country’s external debt ratio -- a solvency indicator -- or total outstanding debt expressed as a percentage of annual aggregate output improved from 22.5 percent in 2014 to 21.9 percent by end-2015 as a result of the country’s sustained economic growth.

Another external debt indicator, the debt service ratio (DSR), also continue to improve to 5.3 percent in 2015 from 6.3 percent in 2014. The BSP explained this as due to a larger decline in payments vis-à-vis receipts.

DSR relates principal and interest payments (debt service burden or DSB) to exports of goods and receipts from services and primary income and it is a measure of adequacy of the country’s foreign exchange earnings to meet maturing obligations, explained the BSP.