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RP external debt up 5.6% to $55.4-b in Q1


The country's external debt went up by a "prudent" 5.6 percent in the first quarter due to higher borrowings by private enterprises and the national government to stem the swelling budget deficit, the Bangko Sentral ng Pilipinas (BSP) reported Tuesday. BSP officer-in-charge Diwa Guinigundo said the country's outstanding external debt approved by the BSP reached $55.4 billion or 33.2 percent of the gross domestic product (GDP) as of end-March this year “On a year-on-year basis, the debt stock grew by $2.9 billion or 5.6 percent from $52.5 billion in March 2009," Guinigundo said. Guinigundo said the amount was also $2.2 billion or 4.1 percent higher than the end 2009 level of $53.3 billion or 33 percent of GDP. "Major external debt indicators remained at prudent levels by the end of the first quarter," the BSP deputy governor stressed. He pointed out that the growth resulted from net borrowings of $1.5 billion by the private sector and $925 million by the public sector. External debt refers to all types of borrowings by the Philippine residents from non-residents that were approved or registered by the BSP. Last year, the country’s outstanding external debt slipped by 1.1 percent to $53.3 billion or 33.1 percent of GDP in 2009 from $53.9 billion or 32.1 percent of GDP registered in 2008. The country’s external debt to GDP ratio peaked in 1986 at 97.7 percent of GDP but has generally been on a downtrend since 2003 when it reached 72.1 percent down to 32.3 percent in 2008 before picking up slightly to 33 percent in 2009. Also as consequence of the increase in foreign debt stock, the adequacy of the country’s gross international reserves or GIR as cover for short-term debt deteriorated to only 8.7 times the GIR from 11.7 times at end-2009. Still, this was higher than the equivalent six times the GIR ratio posted a year earlier. “Under the remaining maturity concept, the ratio fell to 4.7 times the level of short-term external debt from 5.2 times at end-2009 but higher than the 3.4 times last year. “Short-term accounts under the remaining maturity concept pertain to obligations with original maturities of one year or less plus amortizations on medium and long-term accounts falling due within the next twelve months," Guinigundo said. The country's GDP zoomed to its fastest level in almost two years after expanding by 7.3 percent in the first quarter of the year from 0.5 percent in the same quarter last year. The Philippines escaped recession last year after its GDP grew by 0.9 percent last year from 3.8 percent in 2008. Total public sector external debt went up by $769 million to $42.6 billion as of end-March from the end-2009 level of $41.8 billion due to the net new borrowings of $925 million to finance development projects and other requirements of the National Government. The debt stock of the private sector increased by $1.4 billion to $12.8 billion due to net loan availments of $1.5 billion. Guinigundo said the external debt service ratio (DSR) was estimated at 10.3 percent as of the first quarter of the year from 10.4 percent in 2009 and well below the 20 percent to 25 percent international benchmark indicating that the Philippines has sufficient foreign exchange earnings to service maturing principal and interest payments. The DSR is the percentage of total principal and interest payments to total exports of goods and receipts from services and income. It is a measure of the adequacy of the country’s foreign exchange earnings to meet maturing principal and interest payments. The BSP official explained that the external debt profile remained predominantly medium to long-term in nature accounting for about 90.6 percent of the country's total external debt. The weighted average maturity of medium to long-term debt was 20 years. Short term external debt accounted for less than 10 percent of the debt stock and consisted largely of trade-related obligations and inter-bank borrowings. US dollar-denominated accounts cornered a 51.3 percent share of the country's total external debt followed by the Japanese Yen with 29.4 percent. Multi-currency loans from international lenders including the Asian Development Bank (ADB), the World Bank, among others accounted for 11.2 percent. -GMANews.TV

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