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Philippine External Debt Up Marginally in 2nd Quarter

09.23.2003

Bangko Sentral ng Pilipinas Officer-in-Charge Alberto V. Reyes announced today that the country’s total outstanding external debt approved by/registered with the Bangko Sentral stood at US$56.1 billion as of end-June 2003. This represented a US$0.3 billion or a 0.6 percent increase from the level in March 2003 of US$55.8 billion.

The increase is attributed largely to foreign exchange revaluation adjustments arising from the strengthening of most third currencies against the US Dollar, particularly the Euro which accounted for nearly half (45 percent) of total adjustments. Loan transactions during the period resulted in net repayments of US$0.5 billion. The downward impact of this development on external debt level was, however, negated by a US$0.6 billion reduction in residents’ holdings of Philippine debt papers. “The increase in debt stock was not a result of new borrowings but of secondary market trading of the instruments”, explained BSP Officer-In-Charge Reyes. In line with the internationally accepted residency criterion, these investments are classified as domestic accounts and thus, excluded from external debt figures.

Disbursements on medium and long-term (MLT) accounts amounted to more than US$1 billion, with the private sector accounting for 60 percent. Breakdown of disbursements were as follows: 37 percent to finance various infrastructure projects; 22 percent for private banks’ Tier 2 capital; 21 percent for private sector refinancing; 19 percent for reserve management, and the balance to bank borrowings for re-lending to clients.

The maturity profile of outstanding debt remained heavily biased toward MLT accounts (i.e., with maturities longer than one year) whose share to total further rose to 88.9 percent from 88.5 percent in the previous quarter. The weighted average maturity of MLT debt stood at 16.7 years, and reflected a slight improvement from the March average of 16.6 years. Gross International Reserves of US$16.1 billion as of September 12, 2003 was equivalent to 2.6 times the level of short-term accounts under the original maturity concept and 1.4 times based on the remaining maturity concept.

“The country’s investor base remained diversified ”, Mr. Reyes continued, “with official creditors (international financial institutions, foreign governments and their agencies) accounting for 44 percent of total, followed by non-resident holders of bonds and notes - 30 percent, and banks and other financial institutions - 19 percent.”

The currency exposure was largely in two major currencies: the US Dollar (55 percent) and the Japanese Yen (26 percent). The rest pertained to 16 other currencies, with Special Drawing Rights and the Euro each accounting for 4 percent of total.

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