Foreign debt hits record $139.64 billion

MANILA, Philippines — The country’s external debt hit an all-time high of $139.64 billion in end-September due to higher borrowings of the national government and the private sector, according to the Bangko Sentral ng Pilipinas.

BSP data showed foreign debt climbed by 17.5 percent during the nine-month period from a year-ago level of $118.83 billion.

“The increase was primarily driven by total net availments by both public and private sector borrowers as well as the net acquisition of Philippine debt securities by non-residents,” the central bank said in a statement.

“Public sector net availments for the 12-month period were recorded at $7.94 billion while private sector borrowers accumulated net availments of $6.63 billion for the same period,” the BSP said.

Quarter on quarter, the country’s external debt inched up by 7.3 percent from $130.18 billion as of end-June due to liquidity requirements of the public and private sector as well as the increase in non-residents’ investment appetite for onshore debt securities.

Public sector external debt grew by 8.8 percent to $86.88 billion in the third quarter from $79.83 billion in the second quarter, with its share of total debt at 62.2 percent.

The $7.06-billion increase in public sector borrowings was largely driven by net availments of $3.56 billion and net acquisitions by non-residents of Philippine peso-denominated government debt securities of $2.17 billion.

About 92.2 percent of public sector borrowings are attributed to the national government, while the remaining 7.8 percent pertained to borrowings of government-owned and controlled corporations, government financial institutions and the BSP.

Meanwhile, the private sector’s foreign borrowings rose by 4.8 percent to $52.76 billion in the third quarter from $50.36 billion a quarter prior.

The rise in private sector obligations was mainly driven by the $2.52 billion increase in local banks’ other liabilities as they tapped the offshore markets to address their funding requirements and support asset growth.

Despite the increase in foreign debt, the BSP said the country’s external debt to gross domestic product ratio “remains at a prudent level” as it reached 30.6 percent in the third quarter from 28.9 percent in end-June.

The maturity profile of the country’s foreign debt remained predominantly medium- and long-term in nature. Outstanding borrowings stood at $110.87 billion with share to total at 79.4 percent, while short-term accounts comprised $28.77 billion or the 20.6 percent balance.

Major creditor countries include Japan ($15.38 billion) followed by the Netherlands ($4.61 billion) and the United Kingdom ($4.51 billion).

Borrowings from multilateral lending institutions and bilateral creditors have the largest share of 37.5 percent, followed by loans in the form of bonds or notes with a 34.1-percent share and obligations to foreign banks and other financial institutions with 22.7 percent. The remaining 5.6 percent came from other creditors such as suppliers and exporters.

In terms of currency mix, the country’s debt stock remained largely denominated in dollars (74.5 percent), peso (9.1 percent) and Japanese yen (7.8 percent). The rest (8.6 percent) pertained to 17 other currencies.

The national government borrows heavily from foreign and domestic creditors to finance the country’s budget deficit as it spends more than what it actually earns.