The Market Monitor Minding the Nation's Business
The Philippines’ total external debt (EDT) stood at US$118.8 billion as of end-September 2023, up by US$915 million (or 0.8 percent) from the US$117.9 billion level as of end-June 2023.
Despite the increase in the debt stock, the external debt ratio (EDT expressed as a percentage of gross domestic product) improved to 28.1 percent from the previous quarter’s 28.5 percent owing to the economy’s growth during the third quarter.
Other key external debt indicators also remained at manageable levels. Gross international reserves (GIR) stood at US$98.1 billion as of end-September 2023 and represented 5.7 times cover for short-term (ST) debt based on the original maturity concept.
The debt service ratio (DSR), which relates principal and interest payments (debt service burden) to exports of goods and receipts from services and primary income, increased to 10.3 percent from 4.8 percent for the same period last year due to higher recorded principal and interest payments in 2023. The DSR and the GIR cover for ST debt are measures of the adequacy of the country’s foreign exchange (FX) resources to meet maturing obligations.
The rise in the debt level was due to prior periods’ adjustments (i.e., borrowings made in previous quarters) amounting to US$2.0 billion, of which US$1.9 billion were borrowings by private sector non-bank firms.
The increase in the debt stock from said adjustments was partially tempered by: (a) negative foreign exchange (FX) revaluation of US$655 million; (b) the sale of Philippine debt papers to residents by non-residents of US$220 million; and (c) net repayments of US$200 million. The recorded net repayments during the quarter pertain largely to the redemption by two (2) local banks of its maturing medium-term notes (US$900 million).
Year-on-year, the country’s debt stock rose by US$10.9 billion (or 10.1 percent). The increase was driven by: (a) total net availments of US$6.0 billion, bulk of which were borrowings by the National Government (NG, US$7.8 billion); (b) the change in the scope of the external debt to include non-residents’ holdings of Peso-denominated debt securities issued onshore reported in the first quarter of 2023 (US$3.3 billion); (c) prior periods’ adjustments of US$1.5 billion; and (d) positive FX revaluation of US$291 million.
The sale of Philippine debt papers issued offshore by non-residents to residents of US$224 million had a minimal offsetting effect on the year-on-year increase of the debt stock.
As of end-September 2023, the maturity profile of the country’s external debt remained predominantly medium-and long-term (MLT) in nature, with share to total at 85.6 percent (US$101.7 billion). Relative to previous quarter, the weighted average maturity for all MLT accounts slightly declined to 17.2 years from 17.3 years, with public sector borrowings having longer average tenor of 20.3 years versus 7.2 years for the private sector.