Philippine External Debt Rises 7.3% in Q3 2024

The Philippines’ external debt rose to $139.64 billion (PHP 7.84 trillion) as of the third quarter of 2024, marking a $9.46 billion or 7.3% increase from the previous quarter, according to the Bangko Sentral ng Pilipinas (BSP).

Despite the increase, the external debt-to-GDP ratio remained at a manageable 30.6%, up from 28.9% in the previous quarter. Gross international reserves (GIR) of $112.71 billion provided 3.92 times coverage for short-term debt, indicating strong foreign exchange buffers.

“The external debt position reflects the public and private sectors’ funding needs for development projects and working capital, alongside robust investor confidence in Philippine credit,” BSP Deputy Governor Maria Francesca Ramos said.

The National Government (NG) accounted for a significant portion of the debt increase. It raised $4.17 billion in the quarter, including $2.5 billion from a triple tranche global bond offering and $1.44 billion from loans to finance infrastructure and other programs.

Private sector borrowing also contributed to the rise, with net availments of $1.82 billion and increased offshore market participation.

Additionally, foreign investors acquired $2.77 billion in Philippine debt securities amid a weakening U.S. dollar and expectations of a U.S. Federal Reserve rate cut. A $1.56 billion positive revaluation of non-dollar debt also contributed to the overall increase.

Year-on-year, external debt grew by $20.81 billion or 17.5%, driven by public and private sector net availments and non-resident acquisitions of Philippine securities. Public sector borrowings increased by $7.94 billion, while private sector net availments totaled $6.63 billion.

The BSP emphasized the long-term nature of the country’s debt, with 79.4% classified as medium- and long-term (MLT). Of these, $65.98 billion carried fixed interest rates, reducing exposure to rate fluctuations.

Debt service obligations rose, with the debt service ratio increasing to 11.6% from 10.4% in the same period last year due to higher payments on interest and principal. Still, the country’s reserves and diversified creditor base ensured sustainability.

Major creditors included Japan ($15.38 billion), the Netherlands ($4.61 billion), and the United Kingdom ($4.51 billion). Loans from multilateral and bilateral sources accounted for 37.5% of the total, while bonds and notes made up 34.1%.

Currency composition of the debt remained heavily weighted in U.S. dollars (74.5%), followed by Philippine pesos (9.1%) and Japanese yen (7.8%).

The BSP noted that the country’s external debt levels are consistent with its capacity to meet obligations and remain part of prudent borrowing practices and stable macroeconomic fundamentals.