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Outstanding Philippine External Debt Drops Slightly in December as the US Dollar Gained Strength

03.25.2002

Bangko Sentral Governor Rafael B. Buenaventura reported that “total outstanding Philippine external debt approved by/registered with the Bangko Sentral stood at US$52.36 billion as of end-December 2001, down by US$71 million (0.14 percent) from the September level of US$52.43 billion but up by US$295 million (0.57 percent) from the end-2000 level of US$52.06 billion”.

Net inflows of more than US$1.6 billion from foreign loan transactions during the quarter were offset by downward foreign exchange revaluation adjustments arising from the strengthening of the U.S. dollar vis-à-vis nearly all other currencies. Net transfers of Philippine debt papers from non-residents to residents further reduced debt stock by US$0.1 billion. Estimated inventory of residents’ holdings of Philippine debt papers already exceeded US$5 billion by year-end.

Governor Buenaventura said that “about 60 percent of foreign loan disbursements on medium and long-term (MLT) accounts during the quarter supported the Government’s budgetary requirements (35.6 percent) and the build up of the BSP’s international reserves (23.2 percent). The balance of the disbursements funded various development and capital expansion projects, such as in the areas of power and energy development (18.8 percent) and transportation and communications (12.0 percent).”

Public sector share to total debt outstanding declined to 64.4 percent from 64.6 percent in September 2001 and 66.1 percent in December 2000 with the private sector share rising correspondingly. The public sector consists of the National Government, the Bangko Sentral ng Pilipinas, other government financial institutions, and government-owned and controlled corporations.

The maturity profile of outstanding debt remained favorable and nearly unchanged with 88.5 percent representing MLT loans which had a weighted average original maturity of more than 16 years. “The country’s external position likewise remained comfortable with Gross International Reserves of US$17.39 billion as of March 19, 2002 equivalent to 2.9 times the level of outstanding short-term debt”, the Governor said.

Official creditors continued to be the country’s major source of borrowed funds, with combined exposures accounting for 46 percent of total debt stock. Foreign holders of Philippine international bonds, notes and certificates of deposit represented 26 percent of total portfolio while private foreign banks and financial institutions accounted for nearly 23 percent.

The bulk of the country’s debt stock remained denominated in two major currencies namely, the U.S. dollar (57.4 percent) and the Japanese Yen (24.3 percent).

The country’s debt service ratio for 2001– expressed as the percentage of total debt service payments to exports of goods, services and receipts of income – remained manageable at 16.4 percent.

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