Exterior debt service burden soars to P14.7 billion in 2023

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THE PHILIPPINES’ exterior debt service burden skyrocketed to P14.752 billion final 12 months, knowledge from the Bangko Sentral ng Pilipinas (BSP) confirmed.

Preliminary knowledge from the central financial institution confirmed that the nation’s debt service burden on its exterior borrowings surged by 73.9% final 12 months from the P8.483 billion recorded at end-2022.

The debt service burden refers back to the sum of money a rustic must pay again its overseas collectors.

As of end-2023, the debt service burden was equal to three.4% of gross home product (GDP), increased than the two.1% ratio as of end-2022.

BSP knowledge confirmed principal funds climbed by 67.2% to P7.713 billion final 12 months from P4.613 billion as of end-2022.

Curiosity funds jumped by 81.8% to P7.039 billion final 12 months from P3.871 billion as of end-2022.

Earlier knowledge from the BSP confirmed that the nation’s excellent exterior debt hit a record-high $125.4 billion on the finish of December. This was increased by 12.7% from $111.3 billion at end-2022 and up by 5.5% from $118.8 billion as of end-September.

The exterior debt ratio, or share of exterior debt to GDP, stood at 28.7% within the fourth quarter. This was increased than 28.1% within the third quarter and the 27.5% ratio as of end-2022.

The debt service ratio, or principal and curiosity funds as a fraction of export receipts and first revenue, elevated to 10.2% in 2023 from 6.3% within the earlier 12 months.

Rizal Industrial Banking Corp. Chief Economist Michael L. Ricafort stated that the exterior debt service burden rose sharply as a result of increased rates of interest.

“Increased inflation additionally bloated some authorities expenditures and considerably led to wider finances deficits than in any other case, all of which additionally led to increased native and overseas debt servicing invoice,” he stated in a Viber message.

Inflation averaged 6% in 2023, exceeding the central financial institution’s 2-4% goal vary.

The BSP was one of the vital aggressive central banks within the area final 12 months, because it raised borrowing prices by a complete of 450 foundation factors (bps) from Could 2022 to October 2023 to tame inflation. This introduced the benchmark fee to close 17-year excessive of 6.5%.

“For the approaching months, doable Fed fee cuts later in 2024 that may very well be matched domestically may assist ease the nation’s exterior and native debt service burden when it comes to decrease curiosity bills on overseas and native money owed, going ahead,” Mr. Ricafort stated. — Luisa Maria Jacinta C. Jocson

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