PH’s external debt increases 17.8% – Manila Bulletin

The government borrowed more external loans in 2020 to finance the COVID-19 response, leading to outstanding external debt growing 17.8 percent to $ 98.488 billion from $ 83.618 billion in 2019, according to data from Bangko Sentral ng Pilipinas (BSP).

The country’s external debt as a proportion of GDP increased to 27.2 percent last year from 22.2 percent the previous year. The last time external debt to GDP was at this level was in 2013, and it has been below 23 percent since 2017.

As an indicator of solvency, this level is still considered stable. The GDP ratio increased to 27.2 percent from 25.3 percent at the end of September 2020 after GDP contracted 8.3 percent in the latest quarter and 9.5 percent for all the year 2020, while the external debt increased. Regarding gross national income, it also increased to 25.2 percent in 2020 from 20.2 percent in 2019, but as regards the central bank, this index still indicates the “strong and sustained position of the country to serve external loans in the medium and long term. “

BSP Governor Benjamin E. Diokno said in a statement that the debt stock increased 7.1 percent in the fourth quarter of 2020 from $ 92 billion at the end of September. He said this was due to net profits of $ 7.9 billion from private and public sector borrowers in the fourth quarter.

The National Government (GN) obtained $ 2.8 billion through the issuance of Global Bonds and borrowed $ 733 million from official sources for pandemic response programs and infrastructure projects in the last three months of 2020, the BSP said.

The BSP noted that local private banks also “leveraged a strong Philippine peso against the US dollar to diversify their portfolio and maintain a comfortable liquidity cushion through the end of the year, generating a net availability of $ 3 billion.” .

“The increase in external loans by private non-bank entities was due to the net availability of 1.7 billion dollars to increase their working capital,” explained the BSP.

The $ 544 million foreign exchange revaluation (FX) was also added to the debt stock as the US dollar weakened against other currencies, which can be attributed to expectations of continued stimulus in the US, among others, said the BSP. “The increase in the debt stock was partially offset by prior-period adjustments of $ 1.6 billion and the increase in residents’ investments in foreign-issued Philippine debt securities of $ 410 million,” he added.

On an annual basis, the BSP attributed the $ 14.9 billion increase to the following: net income of $ 12.6 billion, primarily from NG; increase in nonresident holdings of Philippine debt securities issued abroad of $ 1.8 billion; and a positive exchange rate appreciation of $ 1.5 billion.

“The increase in the stock of debt was partially offset by prior period adjustments of $ 1.1 billion,” said the BSP.

Diokno said that despite the increase in the level of external debt, “key indicators of external debt remained at prudent levels” with gross international reserves of $ 110.1 billion at the end of December 2020.

Diokno said the debt service ratio (DSR) also improved to 6.3 percent in 2020 from 6.7 percent in 2019 due to lower payments.

According to BSP data, the maturity profile of the country’s external debt remained predominantly medium and long-term (MLT) or around 85.6 percent of the total. Short-term accounts or those with original maturities of up to one year contributed about 14.4 percent. “The weighted average maturity for all MLT accounts remained at 16.6 years, and public sector loans have a longer average term of 20.4 years compared to 7.3 years for the private sector. This means that the foreign exchange requirements for debt repayment continued to be well distributed and therefore manageable, ”said the BSP.

Public sector external debt at the end of 2020 increased to $ 58.1 billion from $ 54.4 billion in the previous quarter. “Approximately $ 51.9 billion of public sector obligations were loans from NG, while the remaining $ 6.3 billion corresponded to loans from government-owned and controlled corporations, government financial institutions and the BSP,” said the BSP. .

Private sector debt on a quarterly basis also rose to $ 40.4 billion from $ 37.6 billion, with a total share increasing from 40.9 percent to 41.0 percent. The BSP said the rise in private sector debt came after net endorsements of $ 3 billion from private banks and $ 1.7 billion from private non-banks.