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Philippine External Debt Down by US$1.3 Billion in 3rd Quarter

12.23.2002

Bangko Sentral ng Pilipinas Governor Rafael Buenaventura announced today that the country’s total outstanding external debt approved by/registered with the Bangko Sentral stood at US$53.6 billion as of end-September 2002, down by US$1.3 billion or 2.4 percent from last quarter’s US$54.9 billion level. The contraction arose from net repayments reported during the period of US$0.6 billion, an increase of US$0.4 billion in Philippine residents’ investments in Philippine debt papers floated in international capital markets, and negative foreign exchange revaluation adjustment on non-US Dollar denominated debt of US$0.3 billion due to the weakening of third currencies against the U.S. dollar especially the Japanese Yen.

Disbursements of medium and long-term (MLT) foreign loans during the quarter exceeded US$1.1 billion, with the public sector accounting for the bulk or 72.8 percent of the total. “New public sector borrowings largely supported the Government’s general budgetary requirements (37.5 percent) and Bangko Sentral’s reserve management activities (20 percent),” the Governor said, “with the rest funding government infrastructure projects in various areas including transportation and communications (15 percent) and power and energy development (15 percent).” Meanwhile, private sector borrowings were intended for projects in transportation and communications (40.8 percent), power and energy development (33.6 percent) and other sectors (25.6 percent), including manufacturing.

The Governor cited the continuing healthy maturity profile of the country’s external debt with 89 percent of the total representing MLT accounts and only 11 percent representing short-term (ST) accounts. Weighted average maturity of MLT debt was computed at 16.4 years reflecting a slight improvement from last quarter’s 16.2 years. Gross International Reserves (GIR) as of end-November represented 2.7 times the level of ST accounts.

Outstanding public sector accounts decreased to US$34.9 billion or by $0.8 billion, although share to total debt stock was unchanged at 65 percent. The decline resulted primarily from the increase in holdings by domestic investors of Philippine debt papers (which are not considered part of external debt), negative foreign exchange revaluation adjustments, and net repayments on public sector foreign loans.

The Governor also reported that the country’s creditor profile remained diversified with official creditors (international financial institutions, foreign governments and their agencies) remaining as the country’s major source of funds with a share of 45.5 percent of total, followed by foreign holders of bonds, notes and certificates of deposits which accounted for 26 percent, and banks and other financial institutions, 23 percent.

In terms of currency composition, the debt stock remained largely denominated in two major currencies with U.S. dollar accounts representing 56 percent and Japanese Yen accounts, 26 percent. The rest pertained to 16 other currencies with credits denominated in Special Drawing Rights and in Euro accounting for 5 percent and 4 percent, respectively.

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