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NEWS UPDATES Asean Affairs          1  July  2011

Philippines foreign debt increases

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The Philippines’ outstanding external debt went up in the first quarter this year amid fresh borrowings by both the public and private sectors, the Bangko Sentral ng Pilipinas (BSP) said Thursday.

In a statement, BSP Governor Amando Tetangco Jr. said the country’s foreign obligations stood at US$60.9 billion at end-March, up 1.5 percent from the $60 billion at end-2010.

The increase in foreign debt was attributed to new borrowings of $1.8 billion by both the public and private sectors being partly offset by increased resident investments of about $1 billion in Philippine debt papers issued abroad, mostly by Philippine public sector borrowers, the BSP said.

External debt refers to all types of borrowings by Philippine residents from non-residents that are approved/registered by the BSP.

Year-on-year, the external debt stock grew by 7 percent to $4 billion owing to net availments of nearly $3.4 billion by both public and private sector borrowers.

Foreign exchange revaluation adjustments of $2.2 billion owing to the general weakening of the US dollar against most major currencies also contributed to the uptick in the country’s debt. The impact of these factors was partially mitigated by the higher investments by residents in Philippine bonds and notes issued abroad of $1.8 billion, Tetangco said.

“Major external debt indicators remained at comfortable levels during the first quarter,” the BSP chief said.

With gross international reserves at $66 billion as of March, the GIR ratio to short-term debt was at 9.7 percent under the original maturity concept and 6.6 percent under the remaining maturity concept, “much higher than the international benchmark of 1,” Tetangco said.

Short-term accounts under the remaining maturity concept consist of obligations with original maturities of one year or less, plus amortizations on medium and long-term accounts falling due within the next 12 months.

Public sector external debt rose to $46.5 billion in the first quarter from $46.2 billion in December 2010 owing to net availments of $1.3 billion.

Private sector external debt was similarly on the rise, reaching $14.4 billion from $13.9 billion in December 2010, mainly due to increased bank borrowings, as well as a decline in residents’ investments in international debt papers issued by private banks.

The bulk of foreign debt was in US dollar-denominated accounts representing 47.2 percent of the total.

The external debt as a percentage of gross domestic product improved to 29.5 percent from 32.5 percent last year.

The weighted average maturity for all medium to long term accounts was 22.6 years. Public sector borrowings had a longer average tenor of 24.4 years, compared to 11.7 years for the private sector.

Short-term external debt represented 11.1 percent of the debt stock, and consisted largely of trade credits and inter-bank borrowings.


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AseanAffairs   04 January 2011
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It is commonplace in journalism to write two types of articles at the transition point between the year that has passed and the New Year. As this writer qualifies as an “old hand” in observing Thailand with a track record dating back 14 years, it is time take a shot at what may unfold in Thailand in 2011.

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