March 28, 2023

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External debt at record $111.268 billion in 2022

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OUTSTANDING external debt hit a record $111.268 billion, the central bank said, equivalent to 27.5% of gross domestic product (GDP), exceeding the year-earlier level of 27%.

Preliminary data released by the Bangko Sentral ng Pilipinas (BSP) late Friday indicated that external debt at the end of 2022 rose 4.5% from a year earlier.

“Year on year, the country’s debt stock increased by $4.8 billion. This was due to net availments of $8.4 billion (largely by the National Government) and prior periods’ adjustments of $1.6 billion,” the BSP said in a statement.  

The rise in external borrowing was partially offset by the negative foreign exchange revaluation and the increase in residents’ investment in offshore debt paper, the BSP added.

The higher external debt was partly due to the diversification of the borrowing mix amid rising interest rates and elevated global inflation globally, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

The Monetary Board started to increased borrowing costs in May, raising the key policy rate by a total of 400 basis points to 6% in order to curb soaring inflation.

Headline inflation eased for the first time in six months, slowing to 8.6% in February from the 14-year high 8.7% in January. It was the 11th straight month that inflation exceeded the BSP’s 2-4% target.

Despite the increase in the external debt-to-GDP ratio, this is still one of the lowest in the region, Mr. Ricafort said.

The debt-service ratio (DSR) fell to 6.3% in 2022 from 7.5% in 2021.

The DSR is a gauge of the adequacy of foreign exchange earnings for meeting its maturing debt obligations.

External debt includes all types of borrowing by residents from non-residents.

In the fourth quarter, external debt rose by $3.4 billion or 3.1% from the $107.9 billion posted at the end of September.

The growth in the debt stock in the fourth quarter was mainly driven by net availments of $1.8 billion, with the National…

Neil

2023-03-19 07:09:21

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