External debt is the amount of debt payable by the state to foreign or international creditors. The debtor can be a government, company or citizen of that country. The estimated foreign debt of the Philippines under Aquino government in early 2016 was US $ 77,319,196,000.
The public debt is the total amount of debt held by the central or state government. This is also known as national debt. The debtor can be a government, company or citizen of that country. The Philippine public debt estimate under the Aquino government in 2016 was $ 972,678.
- Public debt per person: $ 1,515.28
- Population: 109,805,464
- Public debt as% of GDP: 45.8%
- Total annual debt change: 8.4%
Video External debt of the Philippines
Debt Process
Developing countries use external loans as a mechanism to address the gap between domestic savings and desired investment and the export-import gap.
In practice, debt management involves coordinating some of the key aspects of economic decision making that have an influence on loan contracts, utilization, and the needs and capabilities of debt repayment.
Institutional creditor
The creditor is a party (such as a person, organization, company, or government) that has a claim on a second-party service. This is the person or institution to whom the money owes.
International International Monetary Fund (IMF)
Since its founding in 1947, the IMF has become the premier institution responsible for the maintenance of an ongoing international monetary system.
According to the IMF, the lending process must follow the following procedures: At the request of member countries, IMF resources are usually provided under "arrangements" of loans, which may, depending on the instrument of the loan used, establish specific economic policies and measures. a country has agreed to apply to resolve its balance of payments issue. The economic policy program underlying the arrangements was formulated by the state in consultation with the IMF and in many cases presented to the IMF Executive Board in a letter of intent and subsequently detailed in the annexed "memorandum of understanding". Once the arrangement is approved by the board, IMF resources are usually released gradually as the program is implemented. Some arrangements provide powerful performing countries with one-time access in advance for IMF resources and are thus not subject to policy understanding.
International Bank for Reconstruction and Development (IBRD)
The International Bank for Reconstruction and Development was formed in 1944 to help Europe rebuild after World War II. Today, IBRD provides loans and other assistance mainly to middle income countries. IBRD is the original institution of the World Bank. It works closely with the rest of the World Bank Group to help developing countries reduce poverty, boost economic growth, and build prosperity. Unlike commercial loans, IBRD financing not only supplies borrowing countries with the required financing, but also serves as a means for global knowledge transfer and technical assistance.
Bank procedures, according to World Bank operational guidelines, follow cycles: identification, preparation, appraisal, approval, implementation and completion. The requirements for documentation and decision points differ depending on whether bank loan or bank guarantee is proposed, and on project risk and special consideration. Additional financing and restructuring of investment project financing during implementation also have different documentation requirements and decision points as determined by the manual.
Maps External debt of the Philippines
Debt indicators
Public debt
Due to the large amount of debt that has been issued by the National Government (NG), the Treasury Bureau publishes data allocation and grouping by category on a regular basis. Divided into two general categories, this is
- National Government Debt , which includes outstanding debt and guaranteed debt from within and outside the country; and
- National Government Debt Service , which includes principal payments and interest payments of debt paid in the country and externally.
Under each category, other data types are also included. For domestic debt, this data is as follows:
- With maturity (short term, medium term, long term)
- By type of loan (Treasury Bills, Treasury Bonds/Notes, Loans, others)
- By type of liability (Direct Liability, Liability Assumption)
For external debt, this data is as follows:
- With maturity (medium term, long term)
- By type of creditor (multilateral, bilateral, commercial, foreign debt)
- By type of securities (Loans, bonds/US Dollar notes, Eurobonds, Yen bonds, Peso-denominated bonds)
- By currency type (US dollar, Japanese Yen, Euro, French Franc, Deutsche Mark, PhP, other currencies)
- By type of Liabilities (Direct Liabilities such as Foreign Loans and Treasury, Assumed Liabilities)
Payment balance
The balance of payments (BOP) is included in the annual report of Bangko Sentral ng Pilipinas (BSP) which shows the difference of total payment value to (credit) and out (debit) country. Also known as the "international balance of payments", BOP issued annually contains all transactions between residents and non-residents, including trade in goods and services, revenues, investments, debt services and financial instruments. After logging credit and monetary debits, total assets and liabilities must be zero out. However, in practice, BOP indicates a deficit or surplus and where it came from.
Since 1999, the Philippines has fluctuated between deficits and surpluses. What is most ideal is a high surplus because it shows more money coming into the country. In 2008, despite the global financial crisis, the country still received a surplus of US $ 89 million. This was followed by a surplus growth in 2009 (US $ 5.3 billion) and 2010 (US $ 14.4 billion). In 2014, the country experienced its first deficit in years, with a deficit of US $ 2.9 billion.
Foreign debt ratio
Debt-to-GDP ratio
The Debt-to-GDP ratio is the proportion of a federal debt in a country with respect to its total output or GDP. According to Bangko Sentral ng Pilipinas (BSP), the ratio borne by the Philippines from foreign creditors to what has been produced (GDP) has grown significantly from 61.6% in 1999 to 68.2% in 2001 The ratio fluctuated until 2004 when it began to experience a steady decline until 2008. It rose again to 38.4% in 2009, but eventually fell to 36.9% in 2010. Until 2015, the downward trend, with a ratio of 27.3 % by the end of 2014. Figures generally fluctuate (in terms of public and private foreign debt). The government is basically aiming for a low debt to GDP ratio as it is an indicator that the economy produces high enough output to pay off its loans.
Debt to income ratio
Debt-to-income, according to the National Tax Research Center (NTRC), is an important calculation in evaluating the government's ability to manage its debts. It measures the percentage of total revenues allocated for principal and interest payments. With an increasing debt to income ratio, it is increasingly difficult for governments to handle their national debt.
From nearly 420% stable ratio in 2000-2001, the debt to income ratio fell to 364% and 354% in 2011 and 2012, respectively. However, the ratio then began to soar and reach as high as 539% in 2004. Between 2005 and 2007, the ratio slumped to as low as 327% and then rose again to 391% in 2010.
Debt service ratio
Republic Act 6142 of 1970 defines the debt service ratio as the proportion of principal payments and interest on the debt of medium and long term debt to total external revenue or export earnings. Over the past 15 years, the Philippines debt service (DSB) expenses for goods exports and revenues from services and revenues fell by more than half, from 14.6% in 1999 to 6.2% in 2014. From 2001 to 2009, Figures the frames have fluctuated. However, the ratios from 2009 to 2014 maintain a downward trend. This is preferred because the low debt repayment ratio represents a better international finance.
Assessment of government performance on external debt
Ferdinand Marcos (Dec 1965 - Feb 1986)
During 1966-1969, President Marcos borrowed large sums of money to finance his expansion and domestic reforms. This expansion of the government budget causes an increase in current account deficits and crises in the balance of payments (BOP). According to the Political Economy of Growth and Poverty in the Era of Marcos, the Philippine foreign debt increased from $ 360 million in 1962 to $ 26.2 billion by the end of 1985. During the early 1970s, the government aimed to revive growth and build economic stabilization. plans and arrangements for standby loans with the International Monetary Fund (IMF).
Under the Republic Law 6142 of 1970, all external borrowings by the public and private sector, with the exception of commercial bank sector, shall be approved by the Monetary Board. The Management of Foreign Debt and Investment Accounts (MEDIAD) in the BSP application is screened for all external loans and statistics maintained on the country's foreign debt; this then is a restriction on debt service and on total external debt. The Foreign Currency Deposit System (FCDS), on the other hand, is responsible for external licensing of the banking sector - both domestic and foreign owned.
When Ferdinand Marcos became president in 1965, he continued Macapagal's economic liberalization policy, which in turn caused debt to rise from US $ 277.7 million to US $ 840.2 million at the end of his tenure. On 21 September 1972, Marcos declared martial law, and within the next five years, real GNP grew an average of 7% per year. The next few years are also marked by strong economic performance with rising exports and investment boom, as well as the emergence of capital flight and crony capitalism. The late 1970s were high-level foreign debt and external debt from the public sector. With the second oil price shock during the 1980s, interest rates rose and the government implemented a countercyclical policy to increase public investment to maintain domestic income.
Under Marcos, the Philippines saw its foreign debt balloon from US $ 360 million in 1962 to US $ 26.2 billion in 1986. Most of this debt is for the government to finance economic development projects, which must rely on loans from international lenders - such as theIMF - thus, characterizing Marcos' administration as "debt-driven". The main example of a project to be funded through loans is the Bataan Nuclear Power plant, which has not been used up to date.
In 1983, the Philippines had raised $ 24.4 billion in debt and was unable to meet its payment obligations to the IMF and World Bank. The Philippines must then agree to the conditions of the IMF and World Bank to be given more loans, which has led to the extreme devaluation of the Philippine peso.
In 1982, the Philippines switched to the IMF once again due to BOP difficulties and an increase in extraordinary oil import credits (85%). During 1983, the debt-to-GDP ratio grew to 56% (compared to 35% during 1980) as well as the debt service ratio by 38% (compared to 21% during 1980). The government also called for emergency loans from the World Bank and commercial banks transactions. In December 1984, the country voted to comply with IMF provisions (such as pesos, etc.) to receive additional funds. BOP targets were met in 1985 because current transactions changed positively in FY 1986. But there was a fee; interest rates rose to as high as 40 percent, and real GNP declined 11 percent during 1984 and 1985. In 1986, the ratio of foreign debt to GNP in the Philippines peaked at 97 percent.
Corazon Aquino (February 1986 - June 1992)
Corazon "Cory" Aquino started his reign with a total debt of US $ 60.2 billion. Domestic debt reached US $ 32.06 billion, while foreign debt reached about US $ 28.2 billion. The problem of external debt inherited from the Marcos regime. Aquino had the option to deny the debt acquired by the Marcos regime because of their fraudulent nature. The NEDA secretary believes that, to restore growth, the state should not pay the debt. The creditor does not take much account of the state situation and initially refuses to renegotiate. On the other hand, Jaime Ongpin, finance secretary, and JosÃÆ'Â © B. FernÃÆ'¡ndez, Jr., Bangko Sentral ng Governor Pilipinas, along with representatives of the World Bank and various countries, opposed the Philippines that rejected its debts. The consequence of disrespecting debt, they argue, is the loss of financial aid/support from foreign countries that the Philippines needs to restore the economy. Jaime Ongpin also threatened to resign from his position if Cory decides to refuse. In the end, Cory decides to honor the debt. Later, the United States drafted a "Marshall plan" to assist the country, an initiative that would reduce Congressional obstacles to foreign aid programs and allow the private sector to provide more generous assistance; this proposal will expand private sector investment, increase trading opportunities, and seek solutions to the Philippine foreign debt. Furthermore, P4 billion of foreign debt (including interest) has been settled in the span of 6 years. To finance this, however, the state borrowed a total of P9 billion pesos, bringing the total external debt from $ 28.2 billion to $ 33.2 billion during the reign of Aquino.
The National Development and Economic Authority (NEDA) recommended a two-year moratorium on debt repayment as well as a refusal of "fraud" loans. Business-oriented groups and cabinet members object to this and eventually, Aquino and the BSP reject the moratorium, choosing to maintain a cooperative approach with its creditors.
Through IMF agreements and commercial banks, the Philippines is permitted to enter the Brady Plan, a "3-pronged program" that allows the government to use the funds to repurchase $ 1.31 billion at a 50% discount, to reschedule its matured debts (from 1990 to 1994 ) and for 80 banks to subscribe for a new loan of $ 700 million. A multinational initiative (1989-1991) called the Philippine Assistance Plan (or Multi Aid Initiative) agreed to provide a total of $ 6.7 billion of aid to the country.
In the end, the Aquino government negotiated with various creditor groups to lower interest rates, reschedule state debt, and reduce the total amount of debt itself. "The Aquino government does not seem to be working with Congress to impose an economic package to overcome the country's economic difficulties." Moreover, although debt service payments have only modestly changed (with BoP pressure remaining), overall growth causes the debt-to-GDP ratio to decline as well as the ratio of debt payments to exports.
Fidel V. Ramos (June 1992 - June 1998)
The 12th President of the Philippines, President Fidel Ramos, was able to lift the country's economy through a focus on "community empowerment" and "global competitiveness." During its time, the Philippines is regarded as one of the "Economy of the Tiger Cube" in Asia with its continued growth and prosperity. An example of the prosperity and growth that took place during Ramos' rule was the decline in the inflation rate, down from 20% to 10% even reaching as low as about 5%.
The Fidel V. Ramos government began with a total debt of $ 77.6 billion. 57.2% of which are domestic debt ($ 44.4 billion) while 42.8% comes from external debt ($ 33.2 billion). At the start of the Ramos regime, he imagined the Philippines to be part of the Asian tiger economy. In accordance with his words, the Philippines experienced economic growth. In 1996, GDP grew at a rate of 7.2%. Inflation also fell from 9.7% (Corazon Aquino regime) to 7.3%. However, in the 1997 Asian currency crisis, the Philippine economy suffered a major blow. This may stem from the neglect of the agricultural and manufacturing industries. Peso depreciates from (1992) P27 to (1998) P41 against the dollar.
Ramos tried to control debt through debt restructuring and fiscal management. Ramos claims to have reduced the debt repayment ratio from 40% of export revenue to about 20%. Debt service ratios are reduced in regime as well. However, a decrease in debt payments, partly leads to an economic downturn because funds are not used for development/growth of the country.
Under his rule, Republic Law 7653, better known as the New Central Bank Act, came into force on 14 June 1993. It was effective on July 3 of the same year. This act serves as the governing body of Bangko Sentral ng Pilipinas (BSP) and its responsibilities, government, and operations. President Ramos also encouraged foreign trade and investment that increased the flow of capital into the country. With the rebuilding of access to debt markets, the issuance of government bonds in foreign currency was able to finance the country's recovery, until the 1997 Asian financial crisis.
In the external sector, the volatility of the peso-dollar exchange rate has led to a widening debt spreads. However, through the reform of debt payments and a reasonable fiscal policy, the accumulation of foreign debt is reduced to a level that is more controllable. Foreign exchange controls were also carried out by reducing the supply of foreign currency, while increasing demand.
Joseph Ejercito Estrada (June 1998 - January 2001)
Estrada's short-lived government faced political and economic problems. Domestically, conflicts with the separatist Moro Liberation Front (MILF) group in Mindanao, rampant kleptocracy and two corruption scandals led to a decline in investor confidence from home and abroad. Internationally, the country is also heavily influenced by rising world oil prices and tightening monetary policy from the US Federal Reserve Board.
Under the Estrada regime, the Philippines accumulated debts of P2.1 trillion in 1999. Domestic debt reached P 986.7 billion while foreign debt reached US $ 52.2 billion. Although the Philippines was in a disadvantage, the GDP growth rate was 3.2 percent from -0.5 percent in 1998. In addition, domestic investment increased from 18.8 percent of GDP in 1999 to 21.1 percent of GDP in 2000. Facing high foreign debt right after he took office, President Estrada proposed contractionary policy work to cut government spending strictly according to his proposed budget during the first Country Address Nation (SONA). The austerity measures are never followed. The burgeoning burden of government spending resulted in 136.1 billion rupiah in cash operating deficit. At the end of his trimmed term in 2000, total foreign debt increased from US $ 51.157 billion in 1999 to US $ 51.355 billion. Also, a weakening Peso against the US Dollar (average Php 44.19/US $ 1; a low average record of Php 51.68/US $ 1 on October 31, 2000) resulted in an increase in US interest rates and greatly affected both lending. the private and public sectors.
Another factor that hampers the improvement of the Philippine debt position is the tension between the Estrada and MILF governments. Although the Ramos government made efforts to achieve peace in Mindanao through a signed agreement, they could not agree with the Estrada government. This resulted in various terrorist attacks against the military and Filipino civilians. A total of 277 attacks occurred including the abduction of Father Luciano Benedetti, occupation and arson at Talayan town hall, Maguindanao; and the takeover of Narciso Ramos Highway. This is very damaging to the image of the country and the fear of foreign investment. To overcome the loss of investor confidence, on March 21, 2000, President Estrada launched an "all-out war" against the MILF. After months of conflict, on 10 July 2000, the President declared a victory stating that this, "... will accelerate the government's efforts to bring true and lasting peace and development in Mindanao". In mid-July, the President ordered the military to arrest top MILF leaders.
In October 2000, the final blow to the Estrada presidency came when the President himself was allegedly accused of receiving Php 400 million (US $ 2 million) as a result of illegal gambling gains in what came to be known as the JuetengGate scandal. Later in the year, he was also accused of obstructing justice by influencing the investigation of stock market manipulations. Both scandals immediately erode public confidence and destroy investor confidence. Foreign investment avoids the Philippines in droves. With the after effects of the Asian Financial Crisis still being felt as well as the climate disturbance in the region, the country's economic performance is deteriorating. Towards the end of Estrada's administration, the fiscal deficit doubled to over P100 billion from the P49 billion low in 1998. In January 2001, after an impeachment trial, Estrada was removed from his post by a peaceful, peace-led "Second Peoples" revolution. by Filipino youth, NGOs and the business sector. President Estrada is the only Philippine president dismissed by Congress. He was succeeded by his vice-president, Gloria Macapagal-Arroyo, who became President of the fourteenth Republic.
Gloria Macapagal-Arroyo (Jan 2001 - June 2010)
Under the Arroyo administration, the total outstanding debt only increased by an average of 0.47% per year. This is relatively low compared to other administrations due to the good tax reform program and the high growth rate sustained by the state during this administration. The country is able to reduce its total outstanding debt in 6 of 10 years. However, over the past year, total debt increased 9.09%. During the reign of Arroyo, the total debt of the Philippine Charity Lottery (PSCO) increased by about P4 billion. Arroyo allegedly violated the PSCO mandatory policy rules for fees. Some of these debts are uncountable and therefore accused of being bribes of high officials. It was also mentioned in an article that people were worse at the end of Arroyo's reign than when he first settled down as president. Unemployment rises, household real income shrinks, poverty increases, many are forced to work abroad.
The country's foreign debt reached its peak in 2003 with $ 57.6 billion, which is more than the combined lending of the last two governments. According to the Freedom from Debt Coalition (FDC) Within a span of 14 years, the governments of Aquino, Ramos, and Estrada contracted Php1.51 trillion in debt, Php2.03 trillion less than borrowed by Arroyo in six years at the office. Under Arroyo, the FDC estimates that based on interest and principal payments in 2007, taxpayers bear the burden of repaying debt of 1.2 million per minute. Today, the FDC added, every Filipino man, woman, and child owes creditors Php42.819.42. This ultimately leads to a state of fiscal crisis due to the enormous deficit amount, as recognized by President Arroyo in 2004. In response to this crisis, the choice of an automated allocation policy that will allocate funds for payment of debt services is questionable..
The policy of appropriation means that a portion of the government budget for social services is cut to accommodate foreign debt payments. From 39% in 2001 to 68% in 2004 from the national budget allocated to the payment of interest and principal debt. The disadvantage of this policy is that it has greatly disrupted the country's education, health and infrastructure.
The government implements new tax measures to increase the government budget, thereby reducing the budget deficit. This includes increased excise and corporate taxes, and the most controversial is the increase in value added taxes.
According to former finance secretary Margarito Teves, what the Aquino government calls the Arroyo government as a "lost decade" is inconsistent with what the data shows. During Arroyo's administration, the Ministry of Finance has initiated some positive reforms that benefit and still benefit the country. A low debt increase during the Arroyo administration also resulted in an increase in the credit outlook from negative to stable, and then positive shortly after his tenure. The resilience of foreign debt to these shocks is credited to Arroyo's strong focus on tax reform. In another news article, according to House Minority Leader Danilo Suarez, the Philippines' capacity to lend $ 1 billion to the International Monetary Fund in 2012 should not be credited to the Aquino government, but to the Arroyo government. This is due to the unprecedented rate of growth in the country during the Arroyo administration.
Following the fiscal crisis, the external sector policy for 2005-2006 from Bangko Sentral ng Pilipinas focused on the following: (a) maintaining an appropriate level of reserve reserves to ensure economic liquidity, (b) maintaining market-determined exchange rates, with limited intervention during extreme cases, and (c) controlling foreign loans, especially from the public sector. In addition, fewer loans, better pre-payment schemes, lower foreign exchange rates and increased government revenues led to continued decline in foreign debt until the last year of the Arroyo government, with an extraordinary foreign debt of US $ 64,738 billion in 2009.
Benigno "Noynoy "Aquino III (Jun 2010 - Jun 2016)
During the Aquino administration, debt service and public debt stocks continued to rise. It paid Php634 billion in debt service between July 2010 and April 2011 which was Php8 billion more than in previous periods that were equivalent under the previous administration. These payments during the first ten months also exceeded payments for all of 2007, 2008 and 2009 respectively (and from the first two years combined from the previous government). However, national government debt stocks continued to increase from Php4, 592 billion at the end of June 2010 to Php4, 706 billion in March 2011.
However, according to Bangko Sentral ng Pilipinas, the Philippines became a creditor country in 2010 when it joined the International Financial Transaction Fund (IMF) through which emerging market economies took part in international cooperation efforts to reduce the impact of the euro debt crisis across the global economy. Among the Philippine gains from joining FTP is access to the New Arrangements to Borrow (NAB) facility, established by the IMF to help its members cope with the serious international financial crisis.
The government reported 4.9% growth in real gross domestic product (GDP) in the first quarter of 2011 which was much slower than the 8.4% rate in the first quarter of 2010. Consecutive quarters can not be strictly comparable but it can still be noted that the first three quarters of the Aquino government have seen growth slowing year by year - from 8.9% in the second quarter of 2010, 7.3% in the third quarter, and 6.1% in the fourth quarter, followed by 4.9% in the first quarter of this year.
In addition to this, in early 2011 - and for the first time in the country's independent history - gross international reserves exceeded foreign debt. Foreign exchange reserves rose 20.5% last year to $ 75 billion, up from $ 63 billion by the end of 2010. The Philippines' debt-to-GDP (gross domestic product) ratio is one of the lowest in Asia below 50%.
In June 2013, announced by BSP Governor Amando M. Tetangco, Jr. that the country's foreign debt listed by BSP has declined by US $ 1.0 billion (or 1.8%) to US $ 58.0 billion from US $ 59.0 billion in March. According to him, this is largely the result of net loan payments, mostly by the public sector, as well as a negative foreign exchange revaluation adjustment as the US dollar strengthens, especially against the Japanese Yen. This decline supports an annual trend with debt stocks reflecting a reduction of US $ 3.2 billion (or 5.3%) from US $ 61.2 billion in June 2012.
Trends observed for foreign debt-GDP-ratios were similar for the year, with the ratio down to 21.8% in the second quarter from 22.8% in March and 26.1% in June 2012. In general, the country's economy it is between 2012 and 2013 growing at an average rate of 7.0%.
In addition, the country maintained its growth momentum in 2014 at a rate of 6.1%, as the national government targets to be a 6.0-7.0% growth rate for 2014. At the end of March 2014, it was reported that foreign debt extraordinary registered by BSP of US $ 58.3 billion. The debt-GDP ratio for the year, from 22.8% in 2013, fell to 21.5%.
During the first nine months of 2014, the BOP position of the country recorded a deficit of US $ 3.4 billion, a reversal of the 3.8 billion US dollars surplus recorded in 2013. According to BSP, the deficit is due to a significant increase in net outflows in the accounts finances brought about by large net outflows in portfolio investments and other investments.
Positive developments in the US economy and anticipation of interest rate adjustments by the US Fed have led to capital outflows in emerging markets like the Philippines. Meanwhile, the current account is still a surplus of US $ 6.8 billion supported by strong inflows of payments and revenues from the BPO industry and the export sector. As of December 2014, the country's gross international reserves (GIR) reached US $ 79.8 billion.
Bangko Sentral ng Pilipinas Governor Amando M. Tetangco, Jr. announced that the foreign debt of the Philippines reached US $ 75.3 billion at the end of March 2015, down US $ 2.4 billion (or 3.0 percent) from the level of US $ 77.7 billion at the end of-2014. This decrease was due to net payments (US $ 2.0 billion) primarily by banks. Other factors affecting the decline in debt stocks are from negative foreign exchange revaluation (FX) (US $ 220 million) arising from the strengthening of the US Dollar against other currencies, and an increase in the investment of residents in Philippine debt (US). $ 100 million). The Governor of Tetangco said, "The major external debt indicators are observed at a very wise level in the first quarter of 2015." The gross international reserves (GIR) of US $ 80.5 billion as of end March 2015 represents 6.1-fold for short-term debt (ST) under the initial maturity concept compared to 4.9 times and 4.7 times in late-December and March 2014. Philippine foreign debt consists mainly of medium to long term accounts (MLTs) representing 82.6 percent of the total.
This implies that the FX requirements for debt payments are well distributed and, thus, more manageable. The average weighted average for all MLT accounts persists at 17.0 years, with public sector loans having a 22.2 year tenor average over 8.6 years for the private sector. The external debt of ST consists of 17.4 percent of debt share balances, which consist mainly of bank loans, inter-company accounts of foreign bank branches, trade credit, and non-resident deposits. Public sector external debt reached US $ 39.1 billion (or 52.0 percent of total debt share), slightly lower than the level of US $ 39.3 billion (50.7 percent) at the end of 2014 primarily due to negative currency revaluation adjustments (US $ 209 million) as the US dollar strengthened against most currencies. Private sector debt also declined to the US. $ 36.2 billion from $ 38.3 billion in the last quarter largely due to repayment of bank liabilities (US $ 2.9 billion).
Philippine bond holders and records continue to account for the largest share (33.5 per cent) of total external debt, followed by official sources (multilateral and bilateral creditors - 30.4 per cent), foreign banks and other financial institutions (28.9 per cent ), and foreign suppliers/exporters (7.2 percent). The stock of state debt remained largely in US Dollars (64.6 percent), and Japanese Yen (12.7 percent). The US dollar multi-currency loan from the World Bank and the Asian Development Bank comprises 10.4 percent of the total, while the remaining 12.3 percent is joined by 17 other currencies.
Philippine debt sustainability
According to the NTRC, the assessment of the sovereign sovereign debt for 2012-2017 shows that investors have a positive outlook on the country's economy.
It is said that high debt levels can be considered as sustainable by investors if it decreases. Progress of sovereign debt projected from 2012 to 2017 illustrates the downward trend in debt to GDP and debt to earnings that lead to a further increase in market perception. This ratio shows that for every goods and services worth PhP100 produced by the state in the economy between 2012 and 2017, the state must use around PhP42 to PhP55 for debt repayment.
However, it is still very basic for the government to practice proper debt management to avoid default payments and/or debt services that consume a lot of government revenue (excessive debt).
External debt risk to Philippine economy
According to Bangko Sentral ng Pilipinas:
The sustainability of debt is a big issue, especially for countries facing higher public debt, like what is currently experienced by most developed countries. These countries are vulnerable to rollover risks because debt maturing obligations can become more expensive to refinance considering investors will demand a significant premium to compensate for the greater risk they will assume. The act of punishing the market through higher borrowing costs will make it more difficult for these countries to serve their obligations, creating a vicious cycle of debt traps. This can be exacerbated when the government plans to take unpopular measures that will increase revenues and/or reduce public spending against political backlashes that make them politically unfeasible.
Appendix
External debt for certain years
National government foreign debt and debt service for certain years
Payment balance for selected year
References
Source of the article : Wikipedia
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