External debt service climbs to nearly $8 billion – Manila Bulletin

The Philippines’ external debt service burden reached $7.95 billion at end-October 2021, up 27% from the same period in 2020 of $6.25 billion, based on data from Bangko Sentral ng Pilipinas (BSP).

BSP defines the debt service burden as the payment of principal and interest after rescheduling.

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In the first 10 months of 2021, the country’s main debt service burden jumped 43.36% to $6.05 billion from $4.22 billion in the same period of 2020. main payments relate to short-term fixed and revolving liabilities of banks and non-banks.

However, interest payments on medium and long-term fixed credits continue to fall by 6.40% to 1.90 billion dollars against 2.03 billion dollars. Interest payments relate to short-term fixed and revolving liabilities of banks and non-banks, but do not include prepayments on future maturities of foreign borrowings.

By the end of September 2021, the country’s external debt had risen to $105.93 billion, up 15.16% year-on-year. During this period, the public and private sectors borrowed an additional $14 billion in foreign loans.

External debt ratios remain at cautious levels in the third quarter of 2021 with a GDP ratio of 27.3%, one of the lowest in the region. The debt service ratio (DSR) stood at 8.1% compared to 7.2% at the end of September 2020.

The DSR indicates that the country’s foreign exchange earnings are sufficient to meet repayments of maturing loans, while the external debt to GDP ratio is a solvency indicator that has always shown “a solid and sustainable position to ensure the service of medium and long-term foreign borrowings,” the BSP said.

The maturity profile of the country’s external debt remained predominantly medium and long-term at 88.3%, while short-term accounts accounted for 11.7%.

The BSP said the weighted average maturity of all medium and long-term accounts increased slightly to 17.2 years, with public sector borrowings having a longer average duration of 20.8 years compared to 7.3 years for the private sector. “This means that the foreign currency (currency) requirements for debt payment are still well distributed and therefore manageable,” the BSP said.


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