Foreign debts down to $75 billion in 2nd quarter

The country’s foreign debt reached $75 billion at the end of the second quarter of this year, $3.6 billion lower than $78.6 billion during the same quarter last year, Bangko Sentral ng Pilipinas (BSP) data showed.

The BSP attributed the decline partly to the transfer of debt instruments issued in the country from non-residents to residents.

The negative foreign exchange revaluation adjustments on back of weakening of the Japanese yen against the US dollar also contributed to the drop in foreign liabilities.

Central bank data also showed that the foreign liabilities during the second quarter this year was $321 million lower than the previous quarter’s level.

Compared with the figures in the second quarter of 2014, the current level of the country’s debt contracted by $3.6 billion from the $78.6 billion due to negative foreign exchange revaluation and increase in on-shore creditors’ holdings of Philippine debt, BSP data show.

“Key external debt indicators were observed to have remained at very prudent levels in the second quarter of 2015,” BSP Governor Amando Tetangco Jr. said in a statement.

The Philippines’ capacity to pay its liabilities have not been put in question for decades now due to continued strengthening of its gross international reserves (GIR), which stood at $80.6 billion as of end-June.

This level of foreign reserves is enough to cover 6.1 times of short-term (ST) loans under the original maturity concept.

The bulk of the country’s foreign liabilities is accounted for by medium- to long-term (MLT) accounts at 82.4 percent, while the balance of 17.6 percent is accounted for by ST loans. Also, public sector debt has the bigger share at $38.6 billion, or about 51.5 percent of the total.

Private-sector debt during the second quarter amounted to $36.4 billion.

The central bank said 63.8 percent of the country’s debt stocks were dominated in US dollar and 12.2 percent in Japanese yen.