Gov't borrowings push RP external debt up

The country's external debt rose by 2.5 percent as of end-September from the previous quarter due to higher government borrowings, the central bank said on Tuesday. In a statement, the Bangko Sentral ng Pilipinas (BSP) said external debt hit $53.1 billion, $1.3 billion more than the level at the end of June. "Major external debt indicators remained at prudent levels by the end of the third quarter," it said. External debt refers to all types of borrowings by Philippine residents from nonresidents that were approved by the central bank. Latest data showed that total public sector external debt increased to nearly $41 billion as of end-September due to $1.1 billion in upward foreign exchange revaluation of non-US dollar-denominated accounts arising from the weak greenback. On the other hand, the external debt of the private sector declined by $300 million to about $12.2 billion at the end of September from $12.5 billion as of end-June as corporate debt payments outpaced loan availments. The BSP said major external debt indicators continued to improve due to the country's substantial foreign exchange receipts, comfortable level of international reserves and sustained growth in the national income. The country's gross international reserves reached a new record of $42.5 billion as of end-September The central bank said the country's external debt service ratio was estimated at 10.7 percent for the 12-month period ending in September, slightly higher than 10.6 percent a quarter ago. It traced the rise to declining foreign exchange receipts brought about by the global economic slowdown. "However, the debt service ratio has remained well below the 20-25 percent international benchmark, indicating that the country has sufficient foreign exchange earnings to service maturing principal and interest payments during the current period," the BSP said. Last year, the country's external debt fell by $1 billion to $53.9 billion from $54.9 billion at the end of 2007 as both the public and private sector prepaid some of their outstanding foreign debts. The country's external debt ratio has generally been going down since 2002 and has now fallen to its lowest level since 1986 when it peaked at 97.7 percent of economic output. The central bank said the country's creditor profile remained largely unchanged — official creditors consisting of multilateral institutions and bilateral creditors continued to have the largest exposures, accounting for 45.6 percent of the country's total external debt, followed by foreign holders of bonds and notes with 34.7 percent, and foreign banks and other financial institutions with 13.5 percent. — GMANews.TV