The Philippines’ outstanding external debt remained at a prudent level as its ratio to Gross Domestic Product (GDP) slightly eased to 26.5 percent at end-June 2021 from 26.6 percent a quarter ago.
Benjamin Fiokno, Bangko Sentral ng Pilipias Governor, said “this is reflective of the faster economic growth in the second quarter.”
“Other key external debt indicators also remained at prudent levels. Gross International Reserves (GIR) stood at $105.8 billion as of end-June 2021 and represented 7.5 times cover for short -term (ST) debt based on the original maturity concept,” Diokno added.
For January to June 2021, the debt service ratio (DSR) increased to 9.4 percent from 8.4 percent a year ago due to higher payments. The DSR, which relates principal and interest payments (debt service burden or DSB) to exports of goods and receipts from services and primary income, is a measure of adequacy of the country’s FX earnings to meet maturing obligations.
The country’s total outstanding debt (EDT) to GDP ratio remains one of the lowest as compared to other ASEAN member countries.
EDT expressed as a percentage of GDP is a solvency indicator. The low EDT to GDP ratio indicates the country’s sustained strong position to service foreign borrowings in the medium to long-term (MLT).
External debt stood at $101.2 billion at end-June this year, a $4.1 billion (or 4.3 percent) rise from the $97.0 billion recorded a quarter earlier.
