PH’s debt service burden up 25% – Manila Bulletin

The Philippines posted an external debt service burden of $ 6.8 billion at the end of August this year, up 25.5% from the same period in 2020 from 5.42 billion dollars, according to data from Bangko Sentral ng Pilipinas (BSP).

BSP Governor Benjamin E. Diokno

The principal repayments of the external debt increased by 41.40% year on year to reach 5.26 billion dollars against 3.72 billion dollars. Principal payments relate to short-term fixed and revolving liabilities of banks and non-banks.

Interest payments, on the other hand, fell 9.82% to $ 1.53 billion from $ 1.70 billion last year. These payments relate to the short-term fixed and renewable commitments of banks and non-banking institutions, but do not include early repayments on the maturities of foreign loans in future years.

The debt service burden represents both principal and interest payments after rescheduling. BSP said principal and interest payments on medium and long-term fixed credits include credits from the International Monetary Fund, loans covered by the Paris Club and commercial bank rescheduling, and new monetary facilities. .

The PASB, in its report on external debt, said that the main indicators of external debt remained at prudent levels despite the increase in external debt.

The debt service ratio (DSR) also increased to 9.4% at the end of June, from 8.4% in the same period in 2020 due to higher payments.

The DSR, which relates principal and interest payments or the debt service burden to exports of goods and receipts from services and primary income, measures the country’s ability to pay maturing foreign currency loans.

The total external debt stock at the end of June increased 15.66% year-on-year to $ 101.2 billion from $ 87.5 billion.

“The country’s outstanding external debt remains at a prudent level, its ratio to GDP having eased slightly to 26.5% at the end of June 2021,” said BSP Governor Benjamin E. Diokno.

The ratio of external debt to GDP is slightly lower than the 26.6% at the end of March due to 12% GDP growth in the second quarter.

The external debt-to-GDP ratio is still one of the lowest in the ASEAN bloc.

“In particular, a large part of our external debt has a medium and long term maturity profile and bears fixed interest rates. These support a manageable debt repayment schedule and foreign borrowing is less sensitive to global interest rate volatilities or exchange rate fluctuations, ”Diokno said.


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