Bangko Sentral ng Pilipinas Governor Benjamin Diokno announced that the Philippines’ outstanding external debt remained at a prudent level as its ratio to Gross Domestic Product (GDP) recorded at 27.3 percent at end-September 2021.
The Governor further stated that other key external debt indicators also remained at prudent levels. Gross International Reserves (GIR) stood at $106.6 billion as of end-September 2021 and represented 8.6 times cover for short -term (ST) debt based on the original maturity concept.
For January to September 2021, the debt service ratio (DSR) increased to 8.1 percent from 7.2 percent recorded for the same period 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 external 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, meanwhile, stood at $105.9 billion as of end-September this year, a $4.7 billion rise from the $101.2 billion recorded a quarter earlier.
The rise in the debt level during the third quarter of 2021 was due largely to net availments of $5.7 billion, mainly attributed to the National Government (NG) as it raised $3.0 billion from the issuance of global bonds and $1.3 billion from official sources to fund its general financing requirements and COVID-19 pandemic response programs/projects.
In view of the recent distribution by the International Monetary Fund of the $650 billion SDR allocation to its members last August, the country’s reserve assets and external debt levels increased by $2.8 billion or SDR2.0 billion (share of the Philippines) during the quarter.
