Philippine External Debt

The Bangko Sentral ng Pilipinas (BSP) defines external

debt as all types of borrowings by Philippine residents
from non-residents that are approved/registered by
the institution. It covers all short- and medium-term
obligations of the BSP, domestic commercial banks,
public and private sectors’ payable to non-residents. It
excludes the following: (i) intercompany accounts (gross
Due to Head Office/Branches) of Philippine branches
of foreign banks; (ii) private sector loans without BSP
approval/registration; and (iii) private sector obligations Congressional Policy and Budget Research Department
House of Representatives
under capital lease agreements.
May 2014 (No. 24)
Total External Debt
(In Billion US Dollars)
The public sector accounted for 69.2% of the total
60.0 60.4 60.3
58.5 external debt of the country in 2013. Of the $40.5 billion
60 55.0 54.4 53.9 55.5 54.3 54.9
public external debt, the national government and
50
others accounted for almost 90% of the total while the
40
rest was shared by the BSP and other public banks. On
30
the other hand, the private sector external debt was
20 almost equally shared by banks and non-banks in 2013.
10 It is significant to note the reversing trend in recent
0 years: the increasing loans of banks and the declining
2004 2006 2008 2010 2012
loans of non-banks.
Source of Basic Data: BSP Report on Philippine External
Total External Debt
Total external debt of the country reached $58.5 billion (In Billion Us Dollars)
as of end-2013, 3% lower than its end-2012 level of 70

$60.3 billion. According to the BSP, the decline in the 60

total external debt can be mainly attributed to negative 50

foreign exchange revaluation adjustments of $2.9 billion. 40

This was partly offset by $647 million net availments and 30

an increase in non-residents’ investments in Philippine 20

debt papers of $416 million as investors sought safer 10

investment destination due to lingering issues in the 0

2006 2007 2008 2009 2010 2011 2012 2013
Eurozone and the pace of economic recovery in the US. General Government Monetary Authorities
Banks Other Sectors
Public and Private Sector External Debt Direct Investment:Intercompany Lending
(In Billion US Dollars) Source of Basic Data: BSP Report on Philippine External Debt
2009 2010 2011 2012 2013
In a more detailed breakdown of the external debt, the
Public Sector 43.2 46.2 46.4 45.2 40.5
general government accounted for more than half of
Banks 4.6 4.7 4.8 4.8 4.4
BSP
the total outstanding external debt amounting to $31.8
1.5 1.5 1.5 1.5 1.5
Others
billion or 54.3% of the total as of end-2013. After
3.1 3.2 3.4 3.3 3.0
Non-Banks peaking up at 60.6% in 2011, its share declined in the
38.6 41.5 41.5 40.4 36.1
CB-BOL 0.0 0.0 0.0 0.0 0.0
last two years to settle at 54.3%.
NG & Others 38.6 41.5 41.5 40.4 36.1
Private Sector 11.6 13.9 14.1 15.2 18.0 The total external debt of banks which amounted
Banks 2.1 3.5 4.4 5.7 8.5 to $11.5 billion in 2013 accounted for 20% of the total
Branches of external debt. After contracting in 2008-2009 due to
Foreign Banks 0.8 0.9 1.0 0.8 1.7 the global financial crisis, the external debt of banks
Domestic
Banks 1.3 2.6 3.5 4.9 6.8 increased rapidly, registering two-digit growth rates
Non-Banks 9.6 10.3 9.6 9.4 9.5 until 2013. In contrast to the long-term tenor of general
Total 54.9 60.0 60.4 60.3 58.5 government’s debt, those of banks were predominantly
Source of Basic Data: BSP Report on Philippine External Debt short-term with a ratio of 70:30 in 2013.
By maturity, the country’s external debt has primarily
been dominated by medium- and long-term loans which
consist of foreign borrowings with tenor of more than
one year. The BSP reported that the weighted average
maturity for all medium- and long-term loan accounts
stood at 20 years by end-2013.
There is, however, a noticeable increase in the
proportion of short-term loans or those with maturities
of one year or less in the last four years. After dipping
to 7.3% in 2009, it steadily went up to reach 19.2%
in 2013. In nominal terms, it has increased from $4.0
billion in 2009 to $11.2 billion in 2013.
It is significant to note that the government’s total
external debt are mainly long-term in tenor/nature with
loans and bond and notes recording almost equal share
in 2013. Compared to private sector loans, borrowings
of the public sector are also longer in tenor.
Total External Debt by Maturity
(In Billion US Dollars)
60
50
In 2013, the top bilateral creditors were Japan with
$9.5 billion, United States with $2.8 billion and United
Kingdom with $2.4 billion. On the other hand, the major
multilateral creditors were the Asian Development
Bank with $4.7 billion and the International Bank for
Reconstruction and Development with $3.6 billion jointly
accounting for 80% of total multilateral loans.
Over the last ten years, the share of bilateral creditors
to the total external debt has declined by almost nine
percentage points from 55.5% in 2004 to 46.7% in
2013. On the other hand, both the shares of multilateral
creditors and bondholders/noteholders increased
during the same period.
Source of External Debt
(In Billion US Dollars)
70
60
50
40
30
20
10
0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

40 Country Multilateral Agencies Bondholders/Noteholders

30 Source of Basic Data: BSP Report on Philippine External Debt

20 BSP Governor Amando M. Tetangco stated that major

10 external debt indicators remained at prudent levels as
0 of end-2013. A measure of solvency which indicates the
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
ability of the country to meet its long term obligations
Medium and Long-Term Short-Term is the external debt ratio or total outstanding debt
Source of Basic Data: BSP Report on Philippine External Debt expressed as a percentage of gross national income
The three major categories of external creditors are: (GNI). External debt ratio continued to improve in 2013
(i) bondholders/noteholders; ii) multilaterals; and (iii) to 18.0% from 20.2% in 2012 backed up by the robust
bilateral creditors, banks and other financial institutions, 7.2% GDP and the lower debt level.
suppliers and others. Bilateral creditors are the main External Debt Indicators (%)
source of external debt of the country. In 2013, it was 45
40
recorded at $27.3 billion which accounted for 46.7% 35
30
of the total external debt. Bondholders/noteholders 25
were the second main source of credit with about a third 20
15
of the total while multilateral agencies accounted for 10
5
less than 20% of the total external debt of the country. 0
2005 2006 2007 2008 2009 2010 2011 2012 2013
2013 Total External Debt Debt Service Ratio External Debt Ratio
By Country Profile
Source of Basic Data: BSP Report on Philippine External Debt
Bondholders/
Noteholders UK France Another important debt indicator is the debt service
4.0% 2.2% Germany
35.6% ratio which measures the adequacy of the country’s
1.6%
foreign exchange earnings to meet maturing payments.
Japan
16.3%
Others
This is computed as the percentage of both principal
Countries 17.7% and interest payments to exports of goods and receipts
46.7%
USA from services and primary income. In 2013, the ratio
Multilateral
Agencies
4.9% inched up to 7.6% from 7.3% in 2012. Despite the
17.7% higher debt ratio, it is comfortably below the international
Source of Basic Data: BSP Report on Philippine External Debt benchmark range of 20.0-25.0%.