PHL foreign debt remains manageable, says BSP's Tetangco

Philippine foreign obligations remained manageable, with the ratio of external debt to the domestic economy lower for two successive years, the Bangko Sentral ng Pilipinas said Friday.   Foreign debt went up by $1.7 billion to $61.7 billion in 2011, from $60 billion a year earlier, largely from the $800 million in revaluation adjustments during the third quarter when the US dollar dropped against most currencies, said BSP Gov. Amando Tetangco Jr.   Contributing to the country ‘s foreign debt were $473 million in net availments, $340 million in investments in Philippine debt papers, and $50 million in audit adjustments, according to the central bank chief.   The debt stock as of end-December 2011 was down by $720 million or 1.1 percent from $62.4 billion as of end-September.   Repayments helped trim Philippine foreign debt.   “The debt stock declined due largely to net repayments by both public and private sector borrowers and negative foreign exchange revaluation adjustments as the US dollar recovered against other currencies, particularly the Japanese yen, in the last quarter,” Tetangco said. Foreign debt indicators, not withstanding the slight increase in nominal value, stayed at comfortable and manageable levels last year, he added.   As percentage of gross domestic product, foreign debt went down to 27.5 percent from 30.1 percent, Tetangco noted. “The ratio is an indicator of solvency and reflects the country’s capacity to repay long-term foreign obligations,” he added.   In terms of external debt to GDP ratio, the equation peaked at 97.7 percent in 1986. It has since softened to 68.6 percent in 2003 and 31.1 percent in 2008, before going higher at 32.6 percent in 2009, according to Bangko Sentral data.   Multilateral and bilateral lenders accounted for 44.1 percent of total foreign debt, with 36.6 percent held by investors in Philippine bonds and notes and 12.5 percent by foreign banks and other financial institutions and 6.8 percent by exporters and foreign suppliers.   About 47.4 percent of Philippine foreign debt is denominated in US dollars, 27.1 percent in Japanese yen, and 11.5 percent in other currencies. Foreign loans with maturities over one year make up for 88.6 percent of Philippine external obligation, and 11.4 percent are short-term trade credits and inter-bank borrowings.   The weighted average maturity of medium to long-term debt was 22.5 years. — VS, GMA News