Philippine third-quarter external debt tops $149 billion in new record

OUTSTANDING external debt hit a new record of $149.093 billion in the third quarter, up 6.8% from a year earlier, the Bangko Sentral ng Pilipinas (BSP) reported.

The third-quarter total was 0.1% higher compared to the quarter earlier at $148.873 billion, which had been the previous record.

The central bank called debt levels “broadly stable.”

“The marginal quarter-on-quarter increase was underpinned by heightened engagement of nonresident investors in the domestic capital markets,” the central bank said in a statement late on Friday.

External debt refers to all types of borrowing by residents from nonresidents.

The BSP said net repayments totaled $764.56 million during the period, while valuation adjustments amounted to $442.5 million as the dollar strengthened.

In the third quarter, the peso weakened against the dollar to between the P56 and P57 level, averaging P57.2501 at the end of September.

As of September, foreign debt was equivalent to 30.9% of gross domestic product (GDP), lower than the 31.2% share posted at the end of June.

“Metrics show that the external obligations remained manageable, supported by solid economic conditions and prudent policies,” the BSP said.

Public sector debt hit $96.298 billion in the third quarter, accounting for the bulk of the country’s external obligations.

National Government debt amounted to $90.602 billion, followed by government banks with $5.696 billion and the BSP $3.91 billion.

Japan granted the most loans to the Philippines with $16.059 billion, followed by China with $4.353 billion and the US with $3.36 billion.

The borrowing mix was composed mainly of dollar-denominated debt ($105.675 billion) and yen debt (the equivalent of $11.388 billion).

Meanwhile, the private sector took out $52.796 billion in loans in the third quarter, up 0.07% from a year earlier.

In the third quarter, short-term external debt based on the remaining maturity concept (STRM) stood at $27.16 billion. STRM debt is composed of loans with original maturities of one year or less plus amortization on medium- and long-term accounts falling due within the next 12 months.

“This level remains well-covered by the country’s gross international reserves of $109.06 billion, providing 4.01 times cover for short-term obligations,” the BSP said.

Meanwhile, the central bank added that resident borrowers’ lower principal and interest payments pulled the debt service ratio down to 8.5% at the end of September from 11.5% a year earlier and 8.7% in the previous quarter. — Katherine K. Chan