Philippines external debt declines in 2nd quarter-A A +A
Monday, September 30, 2013
BANGKO Sentral ng Pilipinas (BSP) Governor Amando M. Tetangco Jr. announced that the country’s outstanding external debt approved/registered by the BSP has declined by US$1.0 billion (or 1.8 percent) to US$58.0 billion as of end-June 2013 from US$59.0 billion in March.
This was largely a result of net loan repayments (largely by the public sector), as well as negative foreign exchange revaluation adjustments as the US dollar strengthened, particularly against the Japanese Yen.
On a year-on-year basis, the trend was the same, with debt stock reflecting a reduction of US$3.2 billion (or 5.3 percent) from US$61.2 billion in June 2012.
External debt refers to all types of borrowings by Philippine residents from non-residents that are approved/registered by the BSP.
There was also a general improvement in external debt ratios which remained at very prudent levels, the Tetangco observed.
Gross international reserves (GIR) stood at US$81.3 billion as of 30 June 2013, which is equivalent to 8.5 times the level of short-term (ST) debt under the original maturity concept and 6.2 times under the remaining maturity concept.
The ratio under the remaining maturity concept is substantially higher than the international benchmark of 1.0.
The external debt ratio or outstanding external debt as a percentage of aggregate output (gross national income or GNI) is a solvency indicator that measures capacity to repay obligations over a long-term horizon.
The ratio has continued to strengthen, declining further to 18.3 percent in June from 19.1 percent in the first quarter of the year, and from 21.8 percent a year ago.
The same trend is observed based on gross domestic product (GDP), with the ratio down to 21.8 percent in the second quarter from 22.8 percent in March and 26.1 percent in June 2012, as the Philippine economy expanded by 7.5 percent in the second quarter of the year while outstanding debt declined. (PR)
Published in the Sun.Star Cagayan de Oro newspaper on September 30, 2013.