PH’s external debt rises by $6.5-B

The Philippines’ outstanding external liability has now reached $98.5 billion as of end-2020, swelling by $6.5 billion, or 7.1 percent, from the $92.0 billion level as of end-September 2020, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno said Saturday.

The BSP chief noted the rise in the debt stock during the fourth quarter of 2020 was due to net availments of $7.9 billion by both public and private sector borrowers.

“During the quarter, the National Government (NG) raised $2.8 billion from the issuance of Global bonds as well as $733 million net availments from official sources, to fund its COVID-19 pandemic response programs and various infrastructure development projects,” he noted.

Private local banks leveraged on a strong Philippine Peso vis-à-vis the US Dollar to diversify their portfolio and maintain a comfortable liquidity buffer over the year-end, leading to net availments of $3.0 billion, Diokno added.

Further, the increase in foreign borrowings by private non-banks was due to net availments of $1.7 billion to augment their working capital, while Foreign exchange (FX) revaluation of $544 million added the increase in the debt stock as the US Dollar weakened against other currencies which may be attributed to expectations of continued stimulus in the United States, among others.

On the other hand, Diokno explained that the increase of the debt stock was partially offset by prior periods’ adjustments of $1.6 billion and increase in residents’ investments in Philippine debt papers issued offshore of $410 million.

“The country’s liability stock, meanwhile, surged by US$14.9 billion year-on-year, due to net availments of $12.6 billion, mainly by the NG; increase in non-resident holdings of Philippine debt papers issued offshore of $1.8 billion; and positive FX revaluation of $1.5 billion. The rise in the debt stock was partially tempered by prior periods’ adjustments of $1.1 billion,” stated Diokno.

External debt refers to all types of borrowings by Philippine residents from non-residents, following the residency criterion for international statistics.

In a separate disclosure earlier this March, the Bureau of Treasury said the Philippine Government’s total liability is at P10.3 Trillion ($212 B) at the end of January, 2021, 5.4 percent up compared to December, 2020.

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