THE national government’s borrowings to augment its financing requirements for pandemic response and infrastructure programs, among others, increased the country’s external debt as of March 2023, according to the Bangko Sentral ng Pilipinas (BSP).
In a statement, the BSP said the country’s external debt increased to $118.8 billion as of the end of March 2023. This was $7.5 billion or 6.8 percent higher from the $111.3 billion posted in the same period of 2022.
With a population of 111.57 million as of July 2022, this means every Filipino owes foreign creditors $1,064.89 or P59,484.67 at an exchange rate of P55.86 to the greenback.
“Borrowings by the public sector for the National Government’s [NG] general financing requirements, funding of pandemic recovery measures, and other infrastructure programs, among others, also contributed to the growth in the debt stock,” BSP said.
Drivers for the increase in the external debt stock include net availments of $2.7 billion, largely by the national government as it raised $3 billion from the issuance of a multitranche Global Bond for its general financing requirements and prior periods’ adjustments of $767 million.
The BSP also noted that the appreciation of other currencies against the US Dollar which increased the US Dollar equivalent of borrowings denominated in other currencies, thereby resulting in an overall positive foreign exchange (FX) revaluation of $432 million.
The BSP said external debt (EDT) expressed as a percentage of GDP was recorded at 29 percent for the first quarter of 2023. This is higher than the EDT to GDP ratio of 27.5 percent in end-December 2022.
The central bank said, apart from its financing needs, this increase is due to a change in scope of the external debt stock to include non-resident holdings of Peso-denominated debt securities issued onshore worth $3.8 billion.
“The statistical adjustment, which resulted from the availability of detailed information on non-resident holdings of said securities, is in line with the International Monetary Fund’s standards under the External Debt Statistics Guide and the International Balance of Payments and International Investment Position Manual, 6th edition for external debt reporting,” the BSP said.
Given this, the country’s debt stock rose by $9.1 billion. The increase was due to net availments of $7.6 billion, of which $7.4 billion pertain to national government borrowings; inclusion of non-residents holdings of Peso-denominated debt securities at $3.8 billion; and prior periods’ adjustments of $646 million.
Meanwhile, the transfer of Philippine debt papers of $1.7 billion from non-residents to residents, and negative FX revaluation of $1.3 billion partially tempered the increase in the debt stock for said period.
The BSP noted, however, that while there was an increase, as of end-March 2023, the maturity profile of the country’s external debt remained predominantly medium- and long-term (MLT) in nature, such as those with original maturities longer than one year, with share to total at 85.4 percent.
The country’s major creditor countries were: Japan which owns $14.3 billion of the country’s external debts; United States of America, $3.6 billion; and United Kingdom, $3.2 billion.
BSP data also showed that loans from official sources such as multilateral and bilateral creditors had the largest share at 37.9 percent out of the total outstanding debt.
This was followed by borrowings in the form of bonds/notes which accounted for 35.2 percent of the total; and obligations to foreign banks and other financial institutions at 20.9 percent; while the rest at 5.9 percent were owed to other creditors (mainly suppliers/exporters).
In terms of currency mix, the country’s debt stock remained largely denominated in US Dollar at 76 percent and Japanese Yen at 8.3 percent.
The 15.7-percent balance pertained to 17 other currencies, including the Philippine Peso, Euro and Special Drawing Rights.
End-March external debt up 6.8% to $119B
Source: News Paper Radio
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