External debt, or borrowings by residents from non-Filipino sources, stood 1.3 percent lower to $73.8 billion as of end-March this year, a decrease by $958 million from $74.8 billion at end-December 2016 level.
According to the Central Bank, the decline in outstanding foreign debt resulted from adjustments due to late reporting of principal payments amounting to $673 million. Another $497 million was also chipped off the country’s external debt pile due to the transfer of Philippine debt papers from nonresidents to residents.
Actual net principal repayments of $255 million also pushed the country’s external debt lower during the period.
The Bangko Sentral ng Pilipinas (BSP) said the decline could have been larger if not for so-called foreign-exchange revaluation adjustments of $466 million as the Japanese yen strengthened against the US dollar.
On a year-on-year basis, the debt stock, likewise, dropped by $3.8 billion, from the $77.6-billion level in March 2016
With this development, BSP Governor Amando M. Tetangco Jr. said the country’s external debt remains “at comfortable levels”, as gross international reserves during the period are more enough to cover 5.4 times the country’s short-term external debt under original maturity. The external-debt ratio—a solvency indicator—continued to improve to 20 percent during the period, from 20.4 percent at end-2016. The ratio is computed by getting the outstanding external debt as a percentage of the country’s gross national income. The lower the ratio, the bigger improvement on the economy.
The report also showed the country’s still heavily biased against loans with medium to long-term tenors such that medium- to long-term debts account for 79.6 percent of the total external debt of the country during the period.
“This means that foreigner-exchange requirements for debt payments are well spread out and, thus, manageable,” the Central Bank said. Medium- to long-term debts are those with maturities longer than one year.
The BSP said the average maturity of medium- to long-horizon tenors is at 17.4 years as of end-March this year. Based on borrower-debt profile, public-sector borrowings average 23.1 years and comparevery favorably against private-sector borrowings with a shorter 8.1 years.
Meanwhile, short-term liabilities accounted for 20.4 percent of total debt stock. This consists of bank liabilities, trade credits and other nonbank liabilities.
The bulk of the country’s external debt is still in two major currencies, with US-dollar debt owing to 63.4 percent of total debt, while the Japanese yen accounted for another 12.6 percent of external debt.