The outstanding foreign debt of the Philippines grew by 0.5 percent or US$ 303 million to US$ 57 billion at the end of the first half of this year from US$ 56.7 billion at the end of the previous quarter.

Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr. on Thursday said the expansion “resulted mainly from upward foreign exchange revaluation adjustment (US$ 408 million).”

“Since the outstanding debt is translated to US dollar on report date, upward revaluation adjustment is incurred whenever the US dollar weakens against other currencies such as the Japanese Yen, and vice versa,” he said.

Included in the country’s foreign liabilities is the SDR 838 million (US$ 1.2 billion) outstanding allocation of Special Drawing Rights (SDRs) from the International Monetary Fund (IMF), which is now included as among IMF- member countries’ foreign debt in line with the guidelines made by IMF in its new Balance of Payments Manual, sixth edition (BPM6).

On an annualized basis, the foreign debt rose by US$ 5 billion or 9.6 percent from the US$ 52 billion same period last year “as net new borrowings reached US$ 4.5 billion and upward foreign exchange revaluation adjustment amounted to US$ 767 million,” the central bank reported.

“Additional investments of residents in Philippine bonds and notes issued abroad reduced the debt stock by US$ 407 million,” it said.

“Major external debt indicators remained at prudent levels at the end of the second quarter” Tetangco pointed out.

At the end of the first half of 2010, the country’s gross international reserves (GIR) totaled to US$ 48.7 billion, which the central bank resulted “in further improvement of the GIR to short-term (ST) external debt ratio under both the original maturity and remaining maturity concepts.”

ST accounts are those with tenors of less than one year plus amortizations on medium and long-term (MLT) accounts due within the next 12 months.

BSP said the current dollar reserves of the country is equivalent to 8.9 times the level of ST foreign debt based on original maturity, an improvement from the 8.7 times in the previous quarter and the 6.9 times during the same period last year.

“Under the remaining maturity concept, the ratio showed the same trend, increasing to 4.9 times the level of short-term external debt from 4.7 times as of end-March 2010, and higher than the 3.9 times last year which is substantially higher than the international benchmark of one,” it cited.

Tetangco said the country’s external debt ratio as a percentage of gross national product (GNP) got better to 28.5 percent as of end-June this year from the 29.5 percent in the previous quarter while in terms of gross domestic product (GDP) the external debt ratio is pegged at around 32.7 percent, lower than the 33.9 percent in the first quarter this year “due to the higher level of GDP.”

He said the external debt service ratio (DSR) or “the percentage of total principal and interest payments to total exports of goods and receipts from services and income” is now around nine percent from 10.3 percent in the previous quarter and 10.6 percent year-ago.

“The DSR has remained well below the 20 to 25 percent international benchmark, indicating that the country has sufficient foreign exchange earnings to service maturing principal and interest payments during the current period,” he said.

Of the total, MLT loans had the highest share at 90.4 percent and has a weighted average maturity of 22.2 years.

BSP said foreign obligations of the public sector had longer average tenors of 24 while that of the private sector is 12 years.

Meanwhile the balance of less than 10 percent account for ST loans and composed mainly of trade credits and inter-bank borrowings.

The central bank said total public sector foreign debt rose by US$ 259 million to US$ 44.1 billion at the end of the second quarter this year from the end-March 2010 level of US$ 43.9 billion due to higher revaluation adjustments amounting to US$ 399 million while that of the private sector expanded by US$ 43 million to US4 12.9 million.

Bulk of the financing was sourced from multilateral institutions and bilateral creditors at 45.2 percent followed by foreign holders of bonds and notes accounting at 35.7 percent, foreign banks and other financial institutions, 11.3 percent; and foreign suppliers/exporters at 7.8 percent.

On the other hand, most of the debt are dollar-denominated at US$ 50.2 percent followed by Japanese Yen-denominated accounts, 28.8 percent; multi-currency loans from the Asian Development Bank and the World Bank, 10.8 percent and 10.2 percent in currencies of 18 other countries. (PNA)
DCT/JS