Foreign debts rise to $53.1B until Sep
12/30/2009
The nation’s foreign debt picked up by 2.5 percent to a total of $53.1 billion by the end of September due to increased borrowings mainly from government to plug a record budget deficit expected to end the year at more than P300 billion.
The Bangko Sentral ng Pilipinas (BSP) rationalized the $1.3 billion increase in foreign borrowings to borrowers taking advantage of low interest rates in US dollar-denominated loans in the third quarter.
The low interest rates in the US encouraged so-called dollar carry, or taking low-interest US dollar loans and investing the proceeds in high-yield instruments elsewhere.
In the third quarter, the government borrowed $750 million from the commercial market to help bridge the widening budget shortfall.
Foreign debts totaled $51.8 billion in June. From last year, however, total foreign debts were lower by $347 million. The BSP said this reflects the general cautiousness borrowers worldwide have adopted as consequence of the global financial downturn.
Tetangco said the higher debt stock was also due to the appreciation of so-called third currencies against the US dollar that added $1.2 billion to the amount.
Foreign debts as percent of the gross national product (GNP) were estimated to equal 29.9 percent for September this year from 28.8 percent a year ago.
In local output terms or the gross domestic product, foreign debts equal 33.9 percent which was two percentage points higher than the previous year.
Tetangco added the bulk or 90.4 percent of total foreign debts were classified as medium- to long-term or those with an average maturity of more than one year. Tetangco said the average maturity of such debt accounts was 20.1 years.
Public sector borrowings had longer average tenors of 21.8 years versus only 11.6 years for private sector borrowings.
Total public sector foreign debt add up to $41 billion as a result of revaluation adjustments of $1.1 billion on non-US dollar denominated accounts arising from the weakening of the US dollar.
Private sector external debt fell to only $12.2 billion from $12.5 billion in June as loan repayments by corporate borrowers continue to rise past new loan availments, the BSP said.
