COVID-19 loans push foreign debt to $92 billion

MANILA, Philippines — The Philippines raised its foreign debt pile by double digits in nine months this year as the government turned to the offshore market for more funds to soften the blow of the COVID-19 pandemic on the economy, the Bangko Sentral ng Pilipinas (BSP) said.

BSP Governor Benjamin Diokno said the country’s foreign obligations reached $91.98 billion as of end-September, 11.5 percent or $9.3 billion higher than the $82.67 billion recorded in end-September last year.

Diokno said the rise was mainly brought about by net availments amounting to $5 billion mainly by the national government as it borrowed more to finance COVID-19 measures.

He also cited the transfer of Philippine debt papers from residents to non-residents worth $2.8 billion as several credit rating agencies affirmed their confidence in the economy during the period, the positive foreign exchange revaluation of $936 million as well as prior periods’ adjustments amounting to $645 million.

Despite the rise in external debt, Diokno said the country’s key external debt indicators remained at prudent levels as the total outstanding debt (EDT) expressed as a percentage of gross domestic product (GDP) stood at 25.3 percent as the economy contracted by 11.5 percent in the third quarter.

“The country’s EDT to GDP ratio remains one of the lowest as compared to other ASEAN member countries,” Diokno said.

According to the BSP, major creditor countries include Japan with $15.4 billion followed by the US with $3.2 billion, Netherlands with $3.2 billion, and the United Kingdom with $2.4 billion.

Loans from official sources with multilateral lending institutions and bilateral creditors had the largest share of 36.3 percent, followed by foreign holders of bonds and notes with 34.2 percent, and obligations to foreign banks and other financial institutions at 23.5 percent.