External debt drops to $72.4 B end-Sept.

The weakened peso and prepayments pushed the country’s outstanding external debt lower as of end-September to $72.4 billion, down by 5.6 percent or $4.3 billion compared to same time last year of $76.6 billion. The Bangko Sentral ng Pilipinas (BSP) reported late Friday that the debt stock decreased due to these factors: $2.9- billion net principal repayments by both the public and private sectors; a $1.3-billion negative foreign exchange revaluation adjustment because of a stronger US dollar against other currencies such as the Japanese yen and the peso; and the increase in residents’ holdings of Philippine debt papers issued offshore amounting to $120 million. “The peso’s depreciation during the period may have encouraged a shift in borrower preference from foreign to domestic financing to minimize exposure to exchange rate volatility,” according to a BSP statement quoting Deputy Governor Maria Almasara Cyd N. TuañoAmador. On a quarter-on-quarter basis, external debt is also lower by 0.2 percent or $125 million due to the following: $805-million net repayments and $91-million increase in residents’ investments in Philippine debt papers issued offshore; and a $793-million increase from the adjustments on previous transactions. Tuaño-Amador said “key external debt indicators remained at comfortable levels” at the end of the third quarter. With external reserves of above $81 billion, the debt service ratio or DSR is considered adequate to meet the country’s maturing foreign loans. “As of end-September 2017, the ratio improved to 6.1 percent compared to 6.6 percent in end-June 2017 due to higher receipts during the 12-month period (October 2016September 2017),” the BSP noted. (LCC)