The Philippines’ external debt, as a share of the economy, slightly eased in the second quarter, the Bangko Sentral ng Pilipinas reported.

In a statement, the BSP said the country’s foreign debts accounted for 26.5% of gross domestic product at the end of the second quarter, a tad lower than 26.6% share posted in the previous quarter.

At this rate, the BSP said the country’s outstanding external obligations “remained at a prudent level”.

The BSP also said the easing of the external debt-to-GDP ratio last quarter means the economy is outgrowing the accumulation of foreign liabilities. GDP expanded 11.8% year-on-year in the second quarter.

“The country’s total outstanding debt (EDT) to GDP ratio remains one of the lowest as compared to other ASEAN member countries,” Governor Benjamin Diokno said.

“EDT expressed as a percentage of GDP is a solvency indicator.  The low EDT to GDP ratio indicates the country’s sustained strong position to service foreign borrowings in the medium to long-term (MLT),” Diokno added.

The BSP also said other key external debt indicators also remained at prudent levels. Gross International Reserves (GIR) stood at $105.8 billion as of end-June 2021 and represented 7.5 times cover for short-term (ST) debt based on the original maturity concept.

In the first half, the debt service ratio (DSR) increased to 9.4% from 8.4% a year ago due to higher payments. 

The DSR, which relates principal and interest payments (debt service burden or DSB) to exports of goods and receipts from services and primary income, is a measure of the adequacy of the country’s dollar earnings to meet maturing obligations.