THE PHILIPPINES external Debt costs rose 17% year-on-year at the end of September due to a rise in both interest and principal payments, preliminary data from the Bangko Sentral ng Pilipinas (BSP) showed.
Debt servicing on external borrowings rose 16.8% to $12.85 billion in the first nine months, compared to $11 billion in the same period a year ago.
BSP data shows that capitation payments rose 16.8% to $6.925 billion at the end of September, up from $5.928 billion the year before.
Interest payments also rose 16.8% year-over-year from $5.072 billion to $5.925 billion.
At the end of September, the foreign debt burden as a percentage of gross domestic product (GDP) rose from 3.5% a year earlier to 3.9%.
Separate data from the BSP showed that the Philippines’ outstanding foreign debt reached a record $139.64 billion at the end of September, up 17.5% year-on-year.
This brought the external debt ratio to 30.6%, compared to 28.9% in the previous quarter.
Michael L. Ricafort, chief economist of Rizal Commercial Banking Corp., said the increase in foreign debt repayments was due to an increase in maturing foreign debt in the previous months, leading to higher repayments.
“Increased foreign borrowing, especially since the COVID (coronavirus disease 2019) pandemic, has led to some increase in external debt maturities in recent months, as recently felt,” he added.
Mr Ricafort also noted relatively higher interest payments, while rates are still high as the US Federal Reserve only started its easing cycle at the end of September.
The US central bank started its interest rate cutting cycle in September with a half percentage point cut that was larger than expected. The Fed has aggressively raised rates between 2022 and 2023 to curb rising inflation.
The BSP external debt data includes loans of Philippine residents from non-resident creditors, regardless of sector, maturity, type of creditor, debt instruments or currency denomination. – Luisa Maria Jacinta C. Jocson