External debt servicing down 23%

The Philippines’ external debt service burden was lower as of endApril at $2.11 billion or 23.16 percent down from the same period last year of $2.746 billion.

Data from the Bangko Sentral ng Pilipinas (BSP) showed that principal external debt service burden dropped to $1.158 billion from the same time in 2015 of $1.885 billion, or 38.56 percent lower. External debt refers to all types of borrowings by Philippine residents from non-residents, following the residency criterion for international statistics.

Interest payments, however, increased to $952 million, up 10.56 percent year-on-year from $861 million in April 2015.

The external debt service burden is one of the key indicators used by the BSP to monitor both the public and private sector’s capacity to pay principals and interests on their foreign obligations. It excludes payments that do not involve actual outflows such as rescheduling or refinancing of existing debt and conversion of debt into equity.

The BSP reported earlier that the country’s outstanding external debt increased by 3.1 percent year-on-year to $77.6 billion as of end-March. The external debt vis-à-vis gross domestic product was almost unchanged at 26.5 percent from 26.1 percent the same period in 2015.

The BSP said foreign exchange requirements for debt payments “are well spread out and more manageable” since about 81.6 percent or $63.3 billion of the country’s external debt continued to be mostly medium- to long-term (MLT) in maturity. These loans have original maturities longer than one year in tenor.

The weighted average maturity for all MLT accounts was at 16.9 years, an improvement over the 16.5 years average as of December 2015.

As of end March, the public sector external debt was at $38.9 billion or 50.1 percent of total debt stock, slightly higher than the $38.3 billion or 49.4 percent of total level as of end-2015. The BSP said this due to foreign exchange revaluation adjustments of $765 million arising from a weaker US Dollar.

Private sector debt, on the other hand, was at $38.7 billion or 49.9 percent of total and was down by $489 million quarter on quarter. The reason for the decline was because of net repayments of $1.3 billion which was “partly mitigated by previous periods’ adjustments and increased non-resident holdings of private sector debt papers issued offshore” amounting to $758 million.

The external debt ratio as of end2015 level was 21.9 percent while the debt service ratio of 5.9 percent is slightly higher than the 5.3 percent in December 2015.