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Philippine External Debt Up by US$1 Billion in 1st Quarter

06.20.2002

Bangko Sentral Governor Rafael Buenaventura announced today that outstanding Philippine external debt approved by/registered with the Bangko Sentral amounted to US$53.4 billion as of end March 2002. An increase of US$1 billion (or 2.1 percent) was noted vis-à-vis the end-2001 level of US$52.4 billion. This was attributed largely to net foreign exchange inflows from transactions.

Public sector share to total debt outstanding rose from 64.4 percent in December 2001 to 65.4 percent by end-March this year on account of US$2.0 billion worth of international debt papers issued during the period. These international issues demonstrate the continued confidence of investors in the country and their willingness to commit substantial funds to support government projects.

A US$1.7 billion growth in the country’s gross international reserves (GIR) was likewise observed during the quarter. The Governor said that: “GIR reached nearly US$17.4 billion as of end-March representing more than three times the level of short-term debt. High levels of GIR render the local economy less vulnerable to sudden shifts of investor sentiment and capital flight and the local currency less vulnerable to speculative attacks”. As of end-May 2002, the ratio of GIR to short-term debt remained at 3.1 (using the original maturity concept) and 1.6 (based on current maturity, i.e., including that portion of MLT accounts maturing within the next 12 months).

The maturity profile remained heavily biased towards long-term accounts which represented 90 percent of total debt stock. Long-term loan accounts had a weighted average maturity of 16.1 years.

The country’s creditor base remained diversified, indicative of its ability to attract various types of funders. Official creditors (international financial institutions, foreign governments and their agencies) accounted for 44 percent of debt stock while obligations to foreign holders of bonds and notes accounted for 28 percent. Obligations to private banks and financial institutions remained nearly unchanged at 23 percent of total, with the balance (5 percent) pertaining to non-bank foreign creditors such as suppliers.

External debt continued to be largely denominated in US dollars (58 percent) and Japanese Yen (24 percent). Net loan inflows in US dollars of more than US$1.1 billion as well as the continuing appreciation of the currency vis-à-vis other currencies such as the Japanese Yen, the Euro and the British pound, raised the share of US dollar-denominated debt to total debt stock by more than one percent by the end of the first quarter.

“Loan disbursements were intended mainly to support the government’s budgetary requirements, beef up international reserves, and finance projects for transportation and communication, power and energy development”, the Governor said.

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