Rising tide:  Philippine external debt soars to $117.9 billion 

The Philippines saw  a significant uptick in its external debt, with the latest data from the Bangko Sentral ng Pilipinas (BSP) showing  a 9.5 percent increase to reach $117.92 billion as of the end of June. 

This surge in external debt  can be primarily attributed to the national government (NG), which secured $7.8 billion in loans during the period. 

Concurrently, non-residents’ holdings of peso-denominated debt securities issued onshore amounted to $3.7 billion. Total net availments amounted to $7.8 billion, with prior adjustments from preceding periods contributing an additional $312 million.

However, mitigating factors came into play, including the transfer of approximately $1.3 billion in domestic debt papers issued offshore from non-residents to residents. Additionally, a negative foreign exchange (FX) revaluation of $295 million tempered the year-on-year expansion of the debt stock, reflecting a reduction in US dollar borrowings attributed to fluctuations in the greenback’s exchange rate.

On a quarterly basis, the BSP reported a 0.8 percent decline, equivalent to $894 million, in external debt from the end-March figure of $118.8 billion. This decrease was primarily due to the appreciation of the US dollar against other currencies, driven by ongoing US Federal Reserve policy rate tightening.

 The resultant negative FX revaluation of $963 million, coupled with the sale of Philippine debt papers by non-residents to residents, collectively reduced the debt stock by $305 million. These developments offset prior adjustments of $264 million and net availments of $110 million.

The outstanding external debt of $117.918 billion now represents 28.5 percent of the country’s gross domestic product (GDP), marking an increase from the 26.8 percent recorded in the preceding year.