By Luisa Maria Jacinta C. Jocson, Reporter
THE PHILIPPINES’ outstanding external debt rose by nearly 10% 12 months on 12 months as of end-2024, the Bangko Sentral ng Pilipinas (BSP) said.
Preliminary data showed the country’s external debt increased by 9.8% to $137.63 billion as of end-December 2024 from $125.39 billion in the identical period in 2023.
Nevertheless, the debt stock edged lower by 1.4% quarter on quarter from the record-high $139.64 billion as of end-September.
External debt refers to all sorts of borrowings by residents from nonresidents.
“The rise was driven primarily by net availments of $9.61 billion to handle liquidity requirements of the private and non-private sector,” the central bank said.
BSP data showed public sector net availments amounted to $5.59 billion last 12 months, while the private sector’s net availments reached $4.03 billion.
“The web acquisition of Philippine debt securities by nonresidents of $3.37 billion resulting from investor preference towards emerging market debt securities for many of 2024 in addition to prior years’ adjustments of $634.76 million further contributed to the rise in debt stock.”
“Meanwhile, the negative FX (foreign exchange) revaluation of borrowings denominated in other currencies of $1.39 billion tempered the rise in debt,” it added.
This brought the external debt as a percentage of gross domestic product (GDP) to 29.8% from 30.6% within the third quarter. Nevertheless, this was higher than the 28.7% posted in 2023.
The central bank said the external debt-to-GDP ratio stays at a “prudent” level.
“This improvement within the ratio was driven by the decline in external debt levels along with the Philippine economy’s 5.2% real GDP growth for the fourth quarter and 5.6% growth for the total 12 months,” it added.
Meanwhile, the BSP attributed the 1.4% quarter-on-quarter decline within the debt stock attributable to the negative FX revaluation of borrowings denominated in other currencies.
It also cited the “net acquisition by residents of Philippine debt securities from nonresidents aggregating $835.33 million; and recorded net repayments amounting to $133.51 million.”
“Through the reference quarter, the appreciation of the US dollar decreased the worth of the country’s debt stock by $1.29 billion,” it said.
At the top of 2024, the peso closed at P57.845 versus the dollar, declining by P2.475 or 4.28% from its end-2023 finish of P55.37 against the greenback.
“The US dollar strengthened attributable to improved US economic performance, market perception towards Federal Reserve’s future policy path in addition to expectations on the shift in US trade and investment policies under the then incoming administration.”
“The identical underlying aspects can have also triggered nonresidents to dump Philippine debt securities, further lowering outstanding external debt by $835.33 million,” it added.
Broken down, the private sector’s external debt slipped by 0.9% to $52.29 billion at the top of the fourth quarter from $52.76 billion at the top of the third quarter.
“The modest decline in private sector borrowings were driven by the web acquisition by residents of debt securities issued offshore aggregating $870.03 million,” the BSP said.
It also cited the negative FX revaluation of borrowings denominated in other currencies of $154.11 million and net repayments of $70 million, which offset prior periods’ adjustments of $313.98 million.
Public sector debt dropped by 1.8% to $85.34 billion as of end-fourth quarter from $86.88 billion as of end-third quarter.
This was attributable to the $1.44-billion negative FX revaluation of borrowings denominated in other currencies.
“Prior periods’ adjustments of $71.23 million in addition to net repayments of $63.51 million further reduced the outstanding levels.”
The majority or 92.9% of public sector obligations were from the National Government, while the remainder got here from borrowings of government-owned and -controlled corporations, government financial institutions, and the BSP.
The Philippines’ top creditor countries were Japan ($15.18 billion), Singapore ($5.06 billion) and the Netherlands ($4.55 billion).
The borrowing mix was composed mainly of US dollar-denominated debt (74%) followed by debt in Philippine peso (9.2%) and debt in Japanese yen (7.5%).
The central bank said other key external debt indicators were also still at “sustainable levels.”
The country’s gross international reserves (GIR) stood at $106.26 billion as of end-2024. This represented 3.81 times cover for short-term (ST) debt based on the remaining maturity concept.
“The debt service ratio (DSR) rose to 11.5% from 10.3% for a similar period last 12 months attributable to the upper recorded debt service payments.”
The DSR and the GIR cover for short-term debt is a gauge of the adequacy of foreign exchange earnings to fulfill maturing debt obligations.
Rizal Business Banking Corp. Chief Economist Michael L. Ricafort said the persistent NG budget deficit contributed to the rise in external debt.
“The budget deficit fundamentally led to more local and foreign borrowings and outstanding debt, despite increasing the share of local borrowings in the entire borrowing mix to higher manage foreign exchange risks entailed in external debt,” he said.
The NG’s budget deficit narrowed by 0.38% to P1.506 trillion in 2024 from P1.512 trillion in 2023. Nevertheless, it exceeded the P1.48-trillion deficit ceiling set by the Development Budget Coordination Committee.
Moving forward, the share of external debt to the general borrowing mix is anticipated to be reduced, Mr. Ricafort said.
“A number of the foreign borrowings lately were meant to diversify borrowing sources for the NG and to supply liquidity of world bonds within the international market,” he said.
In January, the NG raised $3.3 billion from the sale of 10-year and 25-year fixed-rate global bonds and seven-year euro sustainability bonds. It was NG’s first global bond offering for the 12 months.
The federal government plans to borrow P2.55 trillion this 12 months, of which P507.41 billion will come from external sources.
