External debt ratios remain at prudent levels

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    Bangko Sentral ng Pilipinas Governor Benjamin E. Diokno, announced that the Philippines’ outstanding external debt stood at $82.7 billion as of end-September 2019, up by $1.4 billion from the $81.3 billion level as of end-June 2019.

    The rise in the debt stock during the third quarter was due to net availments of $2.2 billion attributed to bond issuances of the National Government and private local banks. Increase in residents’ investments in Philippine Debt Papers issued offshore amounting to $426 million, negative foreign exchange revaluation of $211 million, and prior periods’ adjustments of $114 million partially offset the uptick in the debt stock.

    Year-on-year, the debt stock increased by $6.3 billion brought about by net availments, FX revaluation adjustments, and prior periods’ adjustments.

    This upward impact on the debt stock was partially offset by the transfer of Philippine debt papers from non-residents to residents.

    External debt refers to all types of borrowings by Philippine residents from non-residents, following the residency criterion for international statistics.

    Diokno further stated that key external debt indicators remained at prudent levels despite the rise in external debt. Gross International Reserves stood at $85.6 billion as of end-September 2019 and represented 5.4 times cover for short term debt under the original maturity concept.

    As of end-September 2019, the maturity profile of the country’s external debt remained predominantly medium- and long-term (MLT) in nature, with share to total at 80.8 percent.

    On the other hand, short term accounts comprised the 19.2 percent balance of debt stock and consisted of bank liabilities, trade credits and others.

    The weighted average maturity for all MLT accounts increased to 17.1 years, from 16.8 years during the previous quarter, with public sector borrowings having a longer average term of 21.0 years compared to 8.5 years for the private sector.

    This means that FX requirements for debt payments are well spread out and, thus, more manageable.