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The country’s external debt service burden decreased 11.11 percent to $ 4.934 billion at the end of August from $ 5.551 billion at the same time last year, according to the Bangko Sentral ng Pilipinas (BSP).
The debt service burden is the payment made to both principal and interest on public and private sector debts after rescheduling. Does not include prepayments.
Data from Bangko Sentral ng Pilipinas (BSP) showed that principal payments fell 1.30 percent year-on-year to $ 3.318 billion from $ 3.362 billion. Interest payments also decreased by 26.17 percent to $ 1.616 billion from $ 2.189 billion at the same time in 2019.
The principal and interest payments correspond to credits, loans and new money facilities with a fixed medium and long term. Interest payments also include short-term fixed and renewable liabilities from both banks and non-banks.
The BSP said that external debt figures and shares are still at comfortable levels despite more government loans due to the pandemic. At the end of June, the country’s total outstanding external debt increased 7.6 percent year-on-year to $ 87.453 billion. The debt service rate indicated by a country
Sufficient stock of currencies, improved to 7.8 percent from 7.7 percent in 2019.
As part of its mandate, the BSP has mechanisms to ensure debt sustainability. All external loans must go through the Monetary Board of the central bank for evaluation and approval.
The BSP review includes how a new external loan will affect liquidity and external accounts in general, as well as its impact on the economic, monetary and financial system.
BSP Governor Benjamin E. Diokno continued to assure the public that the impact of new external loans on key metrics is manageable and sustainable.
“Even with the huge financing requirements to mitigate the effects of the pandemic, the debt profile of our economy remains manageable,” Diokno said last Friday. “Furthermore, the country’s total external debt increased to only 24 percent of GDP at the end of June, a large part of which is in the form of medium and long-term loans.”
Overall, including domestic debt, the Philippines’ debt-to-GDP ratio increased to 48 percent at the end of June. Diokno said this level is well below the proportion of 72 percent in 2004 during the fiscal crisis.
Total outstanding external debt to GDP rose to 23.7 percent at the end of June from a proportion of 21.4 percent at the end of March as GDP fell 16.5 percent while external debt increased. Even so, the BSP said that this index indicates the “sustained solid position of the country to service external loans in the medium and long term” because it is one of the lowest debt to GDP ratios in the region and among the countries of the ASEAN.
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