Bangko Sentral ng Pilipinas (BSP) Governor and incoming Department of Finance Secretary Benjamin Diokno has assured the public that despite the skyrocketing Philippine external debt, it is still within manageable levels.
In a statement on Friday, June 17, Diokno highlighted that the country’s outstanding external debt (EDT) to gross domestic product (GDP) ratio was at 27.5% by the end of March 2022, which remains to be one of the lowest among ASEAN member countries, although slightly higher than the 27% a quarter earlier or end-2021, and end of March 2021 at 26.7%.
“The low EDT-to-GDP ratio indicates the country’s sustained strong position to service foreign borrowings,” Diokno said.
Diokno also pointed out that the country’s debt service ratio (DSR), or the principal and interest payments earned from exports of goods and receipts from services and primary income, fell from 14.3 percent to 4.1 percent from last year, due to scheduled lower repayments accompanied by higher receipts.
Other key external debt indicators, such as the country’s gross international reserves – which measures the country’s ability to settle import payments and service foreign debts – was at $107.3 billion as of end of March 2022, enough to cover 7.7 times our short-term debt based on the original maturity.
The country’s total external debt, or all types of borrowings by Philippine residents from non-residents – was at $109.8 billion as of the end of March 2022, an increase of 3.1% or $3.3 billion from the end of December 2021’s $106.4 billion.
“The rise in the debt level during the first quarter of 2022 was due to net availments of $3.5 billion, mainly by the National Government (NG) and private non-banks,” Diokno said.
The borrowed funds amounting to $2.3 billion was used by the government for COVID-19 pandemic response programs and other infrastructure projects, and another $2.3 billion from the issuance of global bonds under its 2022 Commercial Borrowings Program.
Private-sector borrowings slightly went down by 0.2%, from $42.5 billion to $42.4 billion.
The country’s foreign debt stock remained to be dominated by the US dollar at 55%, and the Japanese yen at 9.2%. Meanwhile, multicurrency loans from the World Bank and Asian Development Bank accounted for 21 percent of the total external debt, while the remaining 15 percent were in 14 other currencies.
Marvin Joseph Ang is a news and creative writer who follows developments in politics, democracy, and popular culture. He advocates for a free press and national democracy. The views expressed are his own.
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