RP foreign debt slips but rises as a ratio of GDP

Philippine foreign debt rose as a percentage of the gross domestic product last year, which the central bank traced to exchange rate movements. The country’s external debt went up by 0.8 percentage point to 33.1 percent of economic output, even as the amount slid after debt payments by banks offset new borrowings by state-owned companies, the central bank said on Wednesday. The external debt to GDP ratio is used to determine whether a country can sustain its foreign debt level. "Major external debt indicators remained at prudent levels by the end of the year," the Bangko Sentral ng Pilipinas (BSP) said. Philippine external debt stood at $53.3 billion as of end-December, 1.1 percent or $601 million lower that a year earlier but 0.2 percent or $120 million higher than in the third quarter. Aside from the debt payments by banks, including the BSP, another reason for the slide in money owed by the country to creditors abroad was increased resident investments in Philippine debt paper issued abroad. The central bank likewise cited the peso’s appreciation against major currencies, including the dollar, as a reason for the lower foreign debt approved and registered with it. Much of the country’s external debt had maturities of more than a year (92.5 percent), which means that loan payments are spread over a longer period. The central bank said public sector external debt went up by 3.7 percent or $1.5 billion to $41.8 billion due to new borrowings to finance development projects of the government. On the other hand, private sector foreign debt slipped by 16 percent or $2.1 billion to US$11.4 billion from a year earlier as repayments by both bank and nonbank borrowers exceeded new loans. The creditor profile was largely unchanged. Official creditors had the largest exposures at 45.7 percent of the total external debt, followed by foreign holders of bonds and notes at 36.6 percent, and foreign banks and other financial institutions at 12.2 percent. The rest of the creditors were mostly foreign suppliers and exporters. Philippine foreign debt remained denominated mainly in dollars (49.2 percent); Japanese yen (28.6 percent); and multi-currency loans from the Asian Development Bank and World Bank (12 percent). The rest of the accounts were denominated in 18 other currencies, the central bank said. — Norman P. Aquino, GMANews.TV