By Lee C. Chipongian
The country’s external debt service burden increased by 10.46 percent year-on-year to $5.238 billion as of end-August from $4.742 billion same time in 2017, according to data from the Bangko Sentral ng Pilipinas (BSP).
External debt service burden, part of the outstanding external debt, represents principal and interest payments but does not include prepayments on future loan maturities.
Total principal payments as of end-August was up by 12.32 percent to $3.410 billion from $3.036 billion same time last year, while interest payments also went up by 7.21 percent to $1.828 billion from $1.705 billion.
The debt service ratio, which relates principal and interest payments or debt service burden to exports of goods and receipts from services and primary income, stood at 6.1 percent as of end-June this year.
This was better than 7.8 percent end-March, according to the BSP. This means that both public and private sectors’ foreign exchange (FX) earnings continue to be adequate to meet maturing loans.
The country’s net principal repayments totaled $2.4 billion as of end-June.
The total public sector external debt decreased to $38 billion from $39.2 billion (end-March) with net principal repayments amounting to $245 million.
About 83.5 percent are government borrowings.
Private sector external debt rose to $34.2 billion as of end-June from $34 billion in the previous quarter.
The total outstanding external debt reached $72.2 billion as of end-June and this was 0.4 percent lower than same time last year of $72.5 billion because of loan repayments and FX adjustments.
In the second quarter, the BSP said the decline in debt stock was mainly because of the following: Negative FX revaluation adjustments amounting to $720 million as the US dollar strengthened against third currencies, particularly the Japanese yen ($454 million); the decrease in non-resident investments by $309 million in Philippine debt papers; and net principal repayments of $246 million.
In terms of debt profile, the maturity profile is still predominantly medium- to long-term or 83.2 percent of total. These are loans with maturities longer than one year.
Short term loans or those with maturities of up to one year such as bank liabilities and trade credits, accounted for 16.8 percent.
The weighted average maturity of medium to long term accounts stood at 17.1 years, with public sector borrowings having a longer average term of 22.6 years compared to 7.9 years for the private sector, said the BSP.