The Government of the
Bangko
Sentral
ng Philippines
Pilipinas
Republic
of the
PHILIPPINE EXTERNAL DEBT:
An Update
DIWA C. GUINIGUNDO
Assistant Governor
Monetary Policy Sub-Sector
Bangko Sentral ng Pilipinas
25 April 2005
Bangko Sentral ng Pilipinas
What is the general policy on foreign borrowings?
BSP Circular No. 1389 (1993) provides that
all foreign currency loans shall be regulated
by the BSP with the view to manage debt
service requirements.*
*Pursuant to Philippine Constitution and Foreign Borrowings Act (R.A. 4860)
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Bangko Sentral ng Pilipinas
What loans are covered by the BSP approval system?
 All foreign borrowings of the public sector
 Private sector loans if:
 Guaranteed by government corporations and/or
government financial institutions, and covered by foreign
exchange guarantees issued by local commercial banks;
 Intended for relending to public or private sector
enterprise for loans obtained by private commercial
banks with maturities of more than 1 year; and
 Foreign exchange to service the debt will be purchased
from the banking system.
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Bangko Sentral ng Pilipinas
What mechanism does the BSP employ to manage the
level of external debt?
 Regulatory issues (e.g., circular, circular letters)
 Administrative mechanism (approval and registration
process, reporting and monitoring system)
 Approve debt reduction schemes
 Debt refinancing/restructuring
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Bangko Sentral ng Pilipinas
RECENT
DEVELOPMENTS
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Bangko Sentral ng Pilipinas
Total external debt remains manageable
 As of endDecember 2004,
total external debt
has declined.
2001 2002 2003 2004
Total Debt (US$ billion)
51.90 53.65 57.40 54.85
Growth (%)
1.35
3.37
6.99
-4.44
in US$ billion
70.00
 On average,
short-term debt
accounts for only
about 10% of
total debt.
Medium-term
Short-term
60.00
50.00
6.18
5.05
48.09
51.22
49.80
2002
2003
2004
6.00
5.56
45.90
2001
40.00
30.00
20.00
10.00
0.00
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Bangko Sentral ng Pilipinas
No bunching of external debt maturities
 MLT debt is well
spread out based
on original maturity.
 MLT debt of the
public sector even
longer.
Weighted Average Maturity for
Medium- to Long-term Debt
(in years)
2002
2003
2004
Total
16.5
17.2
17.4
Public
19.1
19.4
19.6
Private
10.5
11.0
10.9
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Bangko Sentral ng Pilipinas
Interest Rate Profile of MLT/ST Debt
(% share to Total External Debt)
(as of end-2004)
Variable Rate
31.9%
Short-Term Rate
9.2%
Fixed Rate
55.6%
Non-Interest
Bearing
3.3%
Note: Variable, Fixed and Non-Interest bearing rate profile refer to MLT debt
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Bangko Sentral ng Pilipinas
External Debt By Borrower
 Public sector
accounts for
bulk of total
external debt.
Percent Share to
Total (%)
2001
2002
2003
2004
Public
64.35
66.24
68.82
69.10
38.55
41.71
45.49
46.85
35.65
33.76
31.18
30.90
of w/c: NG
Private
in US$ billion
70.00
60.00
Public Sector
50.00
40.00
Private Sector
17.90
16.95
35.54
39.50
37.90
2002
2003
2004
18.50
18.11
33.40
2001
30.00
20.00
10.00
0.00
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Bangko Sentral ng Pilipinas
External Debt By Borrower and Creditor
(as of end-December 2004)
Levels (in US$ million)
Total
Total
Public
Sector
Of w/c:
NG
Percent share to total (%)
Private
Sector
Total
Public
Sector
Private
Sector
54,846
37,895
25,693
16,951
100.0
69.1
30.9
8,440
7,939
4,790
501
15.4
14.5
0.9
Bilateral
16,800
13,900
9,935
2,901
30.6
25.3
5.3
Banks & Fis
11,175
3,627
940
7,548
20.4
6.6
13.8
2,041
47
9
1,993
3.7
0.1
3.6
15,839
12,374
10,019
3,465
28.9
22.6
6.3
551
8
-
543
1.0
0.0
1.0
Multilateral
Suppliers/
Exporters
Bondholders/
Noteholders
Others
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Bangko Sentral ng Pilipinas
External Debt by Currency
 On average,
more than half of
the country’s
external debt is
in US dollars
 External debt of
the public sector
is denominated
largely in
Japanese yen
and in US
dollars.
In US$ billion
2001
2002
2003
2004
US dollar
29.6
29.2
30.9
28.1
Japanese yen
12.7
14.5
15.9
16.4
Euro
1.0
2.0
2.7
3.2
Others
8.6
8.0
7.9
7.1
Debt By Currency (percent share to total)
as of end-Dec 2004
Japanese
yen
30.0%
Euro
5.9%
Others
12.9%
US dollars
51.2%
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Bangko Sentral ng Pilipinas
External Debt by Creditor Country
 Japan and
the US are
the country’s
major
creditors
In US$ billion
2001
2002
2003
2004
Japan
12.0
12.9
14.5
14.5
US
6.0
6.3
6.2
3.9
Germany
3.5
3.2
2.7
2.7
France
0.7
0.9
0.9
1.4
29.7
30.4
33.1
32.3
Others
1/
1/
Includes multilateral agencies and bondholders/noteholders
Others
59.0%
France
2.5%
Germany
4.9%
Japan
26.5%
US
7.1%
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Bangko Sentral ng Pilipinas
Selected Philippine External Debt Ratios
In Percent (%)
2001
2002
2003
2004
External debt to GNP
68.27
65.55
67.36
59.15
External debt to GDP
72.88
69.91
72.35
63.46
DSB to exports of goods,
receipts from services &
Income
15.80
16.41
16.93 a/
13.82
DSB to GNP
8.63
9.10
9.35
7.79
DSB to GDP
9.22
9.70
10.04
8.35
GIR to Short-term Debt
(Residual)
1.44
1.44
1.41
1.57
Starting 2003, income includes cash remittances of OFWs which are reflected under the income account and workers’
remittances of current transfers account.
Note: Debt Service Burden (DSB) refer to principal and interest payments
a/
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Bangko Sentral ng Pilipinas
Philippines: External Debt to GDP
In percent
80.0
> 70.0
70.0
60.0
63.9
63.5
50.0
40.0
'90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04
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Bangko Sentral ng Pilipinas
Philippines: Debt Service Burden to External Revenue
In percent
40.0
30.0
27.2
>25.0
20.0
10.0
13.8
0.0
'90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04
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Bangko Sentral ng Pilipinas
Philippines: GIR to ST debt (remaining maturity)
In percent
250.0
200.0
156.5
150.0
> 100.0
100.0
50.0
48.0
0.0
'90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04
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Bangko Sentral ng Pilipinas
EXTERNAL DEBT INDICATORS OF SELECTED COUNTRIES
2004 (in percent)
ST/EDT
PED/EDT
EDT/GNI
GIR/ST
Philippines
9.2
69.1
59.2
321.6
Indonesia
5.6
60.2 (2003)
77.3 (2003)
463.6
Malaysia
28.0
51.9 (2003)
51.0 (2003)
419.2
Thailand
22.4
32.8 (2003)
38.1 (2003)
435.8
Argentina
38.6
67.6 (2003)
104.9 (2003)
30.9
Brazil
10.8
40.2 (2003)
49.3 (2003)
223.3
Chile
17.6
22.6
51.7 (2003)
207.8
Mexico
13.9
60.7
22.2 (2003)
355.1
EDT – Total External Debt
ST – Short- term debt (Orig. Maturity)
PED – Public External Debt
Sources:National Websites
GDP – Gross Domestic Product
GNI – Gross National Income
GIR – Gross International Reserves
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Bangko Sentral ng Pilipinas
Impact of an increase in global interest rate
A 1 percentage point increase in global interest rate would
result in:
Short-term
Medium- &
long-term
Total
Increase in total
debt service
50
175
225
Increase in
public sector
debt service
10
105
115
in US$ million
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Bangko Sentral ng Pilipinas
Website: www.bsp.gov.ph
E-mail: bspmail@bsp.gov.ph
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