MANILA, October 3, 2005
 (STAR) By Donnabelle L. Gatdula - The Philippines’ foreign debt stock stood at $56 billion as of end-June 2005, a slight decline from the $56.3 billion recorded in the same period last year, Bangko Sentral ng Pilipinas (BSP) data show.

The outstanding external debt approved and registered by the BSP for the six-month period, however, was higher by 1.3 percent over the $55.4 billion level in March 2005.

The BSP attributed the growth in debt stock during the quarter mainly to net inflows from foreign borrowings (excess of availments over principal repayments) of more than $1 billion which were partially offset by negative foreign exchange revaluation adjustment of $780 million.

The decline in the June 2005 level versus June 2004 figure, was due to net principal repayments of external obligations done during the first six months of this year.

Based on the BSP data, bulk or 89 percent of the country’s debt stock are in medium-to-long-term (MLT) maturities, loans, with original tenors of more than one year, had weighted average maturity of 17.6 years.

Public sector borrowings, have a longer average term of almost 20 years compared to 10.8 years for the private sector.

As of end-August 2005, BSP reported that the country’s gross international reserves (GIR) amounted to $17.94 billion.

The GIR level for the first eight months of the year represented 2.9 times the level of short-term debt under the original maturity concept, and 1.7 times of short-term debt based on the remaining maturity concept.

Short-term accounts under the remaining maturity concept consist of loans with original maturities of one year or less plus amortizations on medium and long-term accounts falling due within the next 12 months from the reference period, in this case June 2005.

External liabilities of the public sector represented 68.2 percent of total, with the balance pertaining to the private sector.

The country’s continuing access to a wide investor base was evident in the diversified creditor profile of outstanding liabilities.

Multilateral and bilateral institutions accounted for 41.7 percent of country’s total external debts, followed by foreign holders of bonds and notes at 31.7 percent, and foreign banks and other financial institutions, 21.5 percent. The rest of the creditors (5.1 percent) were mostly suppliers/exporters.

Gross disbursements on medium-and long-term accounts during the second quarter of the year exceeded $1.3 billion, with 69 percent going to the public sector to help finance payments on foreign currency obligations as well as infrastructure and social services projects.

The remaining 31 percent were in the form of private sector drawings mainly for relending and for projects in the transportation, communications and power generation sectors.

At the onset of 2004, offshore banking units (OBUs) operating in the country were reclassified as residents in monetary and financial statistics. As such, offshore borrowings of OBUs are included in the country’s foreign debt statistics, even those whose proceeds are fully relent/invested offshore.During the second quarter, a sizeable amount of such borrowing was observed, increasing the foreign debt by $316 million.

As a ratio of the country’s aggregate output or gross national product (GNP), total external debt in June 2005 was estimated at 56 percent, down by 8.2 percentage points from 64.2 percent in June 2004.

This development indicates an improvement in the country’s capacity to service its maturing foreign obligations on a continuing basis.

For the first half of the year, the country’s debt service ratio (DSR) was recorded at 13.23 percent. DSR refers to the percentage of principal and interest payments relative to the country’s exports of goods and services and income.

According to BSP, the ratio is well below the 20 percent international benchmark.

"It shows that the country has sufficient foreign exchange earnings to meet immediately maturing foreign obligations," BSP governor Amando Tetangco Jr. said.

Chief News Editor: Sol Jose Vanzi

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