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PHL foreign debt up 9.5% to $60B in 2010


A boost in government and private sector borrowings as well as an upward foreign exchange revaluation helped expand the Philippines’ external debt by 9.5 percent in 2010, the Bangko Sentral ng Pilipinas (BSP) reported Thursday. In a statement, BSP governor Amando Tetangco Jr. said the country’s outstanding external debt reached $60.1 billion last year, $5.2 billion more than the $54.9 billion recorded in 2009. External debt refers to all types of BSP-approved or -registered borrowings by Philippine residents from foreign lenders. Government and private borrowers registered $4 billion in net borrowings, and the foreign exchange revaluation amounted to $1.8 billion, which expanded the external debt, the BSP chief said. The level of debt was pushed by increased investments in offshore-issued Philippine bonds and notes, he added. Public sector borrowing – which consisted largely of investments by residents in Philippine bonds and notes issued overseas – reached $46.2 billion or 76.7 percent of the total foreign debt in 2010. Private sector borrowings, meanwhile, stood at $13.9 billion or 23.3 percent of the total. Tetangco said that despite the increased borrowings, the external debt-to-GDP ratio improved to 31.8 percent in 2010 from 34 percent in 2009. The external debt-to-gross national product (GNP) ratio, meanwhile, improved to 27.8 percent from 29.7 percent. "Major external debt indicator continued to improve during the fourth quarter," Tetangco said, without saying why. Improved debt service ratio The BSP meanwhile reported that the external debt service ratio (DSR) also improved to 8.8 percent in 2010 from 10.4 percent in 2009, and well below the 20- to 25-percent international benchmark, which means the Philippines keeps enough foreign exchange earnings to service maturing obligations -- both 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 also measures the adequacy of the Philippines’ foreign exchange earnings to meet principal and interest payments as they mature. According to the central bank, the external debt profile remains predominantly medium- to long-term with maturities of over a year accounting for about 89.5 percent. The weighted average maturity is 22.4 years. "The larger share of medium- to long-term accounts to the total means that loan repayments are spread out over a longer period of time, resulting in a more manageable level of debt payments," Tetangco said. Central bank data also showed that the share of short-term external debt, consisting largely of trade credits and inter-bank borrowings, accounted for 10.5 percent of outstanding foreign debt. — PE/VS, GMA News

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