Total external debt (EDT) stood at $125.4 billion as of end-December 2023, up by $6.6 billion from the $118.8 billion level as of end-September 2023.
Despite the increase in the debt stock, the Bangko Sentral ng Pilipinas said the external debt ratio remains at prudent levels, recording at 28.7 percent in the last quarter of 2023 from 28.1 percent in the third quarter of 2023 and 27.5 percent in end-2022.
Other key external debt indicators also remained at manageable levels. Gross international reserves (GIR) stood at $103.8 billion as of end-2023 and represented 6.1 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 10.2 percent from 6.3 percent for the same period last year due to higher recorded principal and interest payments brought about by rising interest rates 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 largely to net availments of $4.9 billion by both private and public sector borrowers. Private sector borrowings for the quarter were mainly driven by the $3.0 billion availment by a non-bank firm under a syndicated loan from offshore banks,” BSP said.
Proceeds from said borrowings were used to finance its capital expenditures and maturing obligations.
Public sector borrowers, on the other hand, tapped official creditors and the Islamic finance market through the maiden issuance of the National Government’s (NG) $1.0 billion 5.5-year dollar-denominated Sukuk bond to fund general financing requirements, infrastructure projects, and social welfare programs.
The positive FX revaluation of borrowings denominated in other currencies as well as the net acquisition of Philippine debt securities by non-residents from residents further increased the debt stock by $960 million and $816 million, respectively. The rise in the external debt stock was partially tempered by prior periods’ adjustments of $98 million.
Year-on-year, the country’s debt stock rose by $14.1 billion from the end-2022 level of $111.3 billion.
As of end-2023, the maturity profile of the country’s external debt remained predominantly medium- and long-term (MLT) in nature with its share to total at 86.4 percent. Relative to previous quarter, the weighted average maturity for all MLT accounts declined to 16.7 years from 17.2 years, with public sector borrowings having longer average tenor of 19.6 years versus 7.7 years for the private sector.
On the other hand, ST liabilities accounted for 13.6 percent of the outstanding debt stock and comprised mainly of bank liabilities, trade credits, and other liabilities.
Public sector external debt increased to $77.8 billion in the fourth quarter of 2023 from the previous quarter’s $73.7 billion level. Correspondingly, its share to total slightly increased to 62.1 percent from 62.0 percent a quarter ago.
Private sector debt rose to $47.6 billion as of end-December 2023, a $2.4 billion increase from the $45.1 billion level last quarter, despite its share to total slightly decreasing to 37.9 percent from 38.0 percent. Bulk of the recorded availments were from the increase in the reported ST liabilities of local banks as well as borrowings by private sector non-bank entities to meet funding requirements.
Major creditor countries were: Japan ($15.6 billion), China ($4.7 billion), and the United Kingdom ($4.2 billion).
In terms of currency mix, the country’s debt stock remained largely denominated in US dollar and Japanese yen. The rest pertained to 18 other currencies, including the Philippine peso, the Euro, and Special Drawing Rights.