2006 FOREIGN DEBTS PREPAYMENT HITS $4.4B
MANILA, SEPTEMBER 29, 2007 (MALAYA) 2006 PREPAYMENT HITS $4.4B RP prepays $1.7B debts as of July:
The Philippines prepaid more foreign debts this year as a strong peso allowed borrowers to buy more dollars and pay off debts, the Bangko Sentral ng Pilipinas said yesterday.
BSP governor Amando Tetangco Jr. said for the first seven months, the country prepaid a total of $1.7 billion, on top of the record $4.4 billion prepaid last year.
The public sector accounted for the bulk of the total or $1.1 billion. The Bangko Sentral ng Pilipinas prepaid a total of $805 million while the national government pre-terminated $100 million.
The private sector, which has been reporting healthier profits, prepaid a total of $600 million.
This is the second year the country is making prepayments on its external loans. Last year’s prepayment of $4.4 billion was an unprecedented move.
The national government and the BSP prepaid a total of $1.8 billion, broken down into $1.3 billion for the former and $538 million for the latter.
The private sector accounted for the bulk, prepaying $2.6 billion last year.
Flushed with robust dollar inflows, BSP officials said they expect the country to make more prepayments this year.
With the peso expected to remain strong through the year, BSP officials said more private firms may consider retiring some foreign loans ahead of their maturity.
The national government is seen also taking cue, although Finance Secretary Margarito Teves said the government will first review the merits of prepaying, if that’s cheaper than rolling over the debts.
Teves said the government is looking at a menu of foreign loans that may be prepaid, both commercial and concessional loans.
Unlike the BSP, Teves said the government can’t make outright prepayments because of the penalty clauses. The BSP retired loans that had call options.
The prepayments are expected to ease the upward pressure on the peso, which is hurting to exporters.
The peso has averaged 47.23 to the dollar as of Sept. 19, still within the 46-48 forecast for the year.
Tetangco said further liberalization in foreign-exchange rules, expected in the next four months, would contribute in capping the currency’s strength.
The BSP is projecting a $6.3 billion in the balance of payments this year. The level stood at $6.8 billion through August.
Prepayments and net servicing of $400 million debts this year will level off the surplus to the forecast level, the BSP said.
Chief News Editor: Sol Jose Vanzi
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