MANILA, Philippines — The continued strengthening of the US dollar against other currencies including the peso, the prepayment of foreign debt, as well as the shift in borrower preference to domestic borrowings slashed the country’ external debt by 5.6 percent in end September, the Bangko Sentral ng Pilipinas reported over the weekend.
BSP officer-in-charge Maria Almasara Cyd Tuaño-Amador said the country’s external debt declined by $4.3 billion to $72.4 billion in end-September this year from $76.6 billion in end-September last year.
She said the amount was also $125 million lower than the end June level of $72.5 billion.
Tuaño-Amador pointed out the net principal repayments by both the public and private sectors reduced the country’s external debt by $2.9 billion, while the increase in residents’ holdings of Philippine debt paper issued offshore also slashed the foreign debt by $120 million,
On the other hand, she said negative foreign exchange revaluation adjustments arising from strengthening of the US dollar against other currencies, particularly the peso and the Japanese yen, reduced the external debt by $1.3 billion.
The BSP has allowed the modest and gradual depreciation of the peso to support the country’s growing economy. The local currency is the worst performer in the region depreciating by almost two percent year to date. It hit a fresh 11-year low of P51.77 to $1 a few months ago but has recovered back to the P50 to $1 level.
Data showed the debt stock remained largely denominated in US dollar, accounting for 61.5 percent and Japanese Yen at 13 percent.
The US dollar-denominated multi-currency loans from the World Bank and the Asian Development Bank represented 14.3 percent of total, while the 11.2 percent balance pertained to 17 other currencies, including the Philippine peso with seven percent, the International Monetary Fund with 2.2 percent, and the Euro with 1.1 percent.
The country’s external debt remained largely medium- to long-term in nature and represented 80.4 percent of total, while short term liabilities comprised the 19.6 percent balance of debt stock and consisted of bank liabilities, trade credits and others.
Public sector external debt stood at $37.2 billion, accounting for 51.4 percent of total debt stock, while private sector debt cornered a share of 48.6 percent or $35.1 billion.
The BSP OIC said key external debt indicators remained at comfortable levels as the country’s gross international reserves (GIR) stood at $81 billion at end September, representing 5.7 times the short-term debt under the original maturity concept.
For his part, BSP Deputy Governor Diwa Guinigundo said both the government and private sector are prepaying their foreign obligations resulting to a lower external debt for the Philippines.
“There are more repayments compared to availments of external loans. Residents are paying back their loans using foreign exchange to reduce their foreign obligations,” he said.
He added the national government has been quite prudent in availing of foreign debt and is pursuing cheaper official development assistance (ODA) loans. – Lawrence Agcaoili