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Outstanding external debt dips 3% to $58.5 billion in 2013 – BSP

The country’s outstanding external debt dropped three percent year-on-year to $58.5 billion in 2013 due to foreign exchange revaluation adjustments.

The Bangko Sentral ng Pilipinas (BSP) reported that foreign debt, which are all borrowings by both residents and non-residents as registered by the BSP, vis-à-vis gross domestic product also improved to 21.5 percent from the previous quarter’s 21.9 percent.

BSP Governor Amando M. Tetangco Jr. in a statement said on a quarter-on-quarter basis, external debt declined by 0.9 percent.

Tetangco stated that while loan transactions registered inflows worth $898 million, there were other factors that contributed to the overall drop in external obligations.

These factors include the strengthening of the US dollar against the Japanese Yen which the BSP said reduced the US dollar value of Philippine debt by $863 million; and increased residents’ investments in the domestic bonds amounting to $633 million due to the high foreign exchange liquidity of the banking system.

The BSP said the year-to-date decline can also be attributed to the same reasons as “investors sought safer investment outlets for their funds, amidst lingering issues in the Eurozone and the pace of recovery of the US economy.”

The external debt’s solvency indicator as annual aggregate output or GNI also improved to 18 percent from the previous quarter’s 18.4 percent. The external debt service ratio also improved to 7.6 percent because of higher receipts and lower payments during the year – “however, a slight increase in the ratio was noted compared with the end-2012 figure,” said the BSP.

“Nevertheless, the ratio, which measures sufficiency of foreign exchange available to meet currently maturing obligations, has remained well below the 20.0 to 25.0 percent international benchmark, attesting to the country’s strong liquidity position,” it added.

The central bank said the country’s creditor profile remained the same with 36.8 percent of debt owed to official creditors or multilateral and bilateral institutions while 35.6 percent are foreign holders of bonds and notes. About 20.6 percent foreign banks and other financial institutions and seven percent are foreign suppliers/exporters.