The country’s outstanding external debt rose by 5.2% at the end of September from the previous quarter as companies and the government continued to borrow more from overseas amid a coronavirus pandemic, according to the Philippine central bank.
The foreign debt stock hit $92 billion as of end-September from $87.5 billion as of end-June, the Bangko Sentral ng Pilipinas (BSP) said in a statement on Friday. The debt stock has gone up by a tenth this year.
The central bank traced the quarterly uptick to $2.8 billion in net loans obtained by private nonbank companies to boost their working capital, and the $2.4 billion government borrowing meant to boost its pandemic response.
Also pushing up the debt level were the weaker dollar against the peso and higher nonresident investments in Philippine debt securities issued offshore worth $294 million.
External debt refers to all types of borrowings by residents from nonresidents.
BSP Governor Benjamin E. Diokno said key external debt indicators show that the debt stock remained at prudent levels, with the gross international reserves reaching $100.4 billion as of end-September, which could cover short-term obligations by nine times.
The debt service ratio, which relates principal interest payments to exports of goods and receipts from services and primary income, rose to 7% last quarter from 6.4% a year earlier.
The total outstanding debt climbed to 25.3% as a share of overall economic output last quarter from 23.7% a quarter earlier.
“The ratio indicates the country’s strong position to service foreign borrowings in the medium to long-term,” Mr. Diokno said. The ratio of the country’s external debt to economic output remained one of the lowest in the region, he added. — Beatrice M. Laforga