A STRONGER dollar helped reduce the country's external debt last year, the Bangko Sentral ng Pilipinas (BSP) said late on Friday.
Money owed to foreign creditors fell by $2.02 billion to $137.63 billion by the end of December, down 1.4 percent from the $139.64 billion recorded three months earlier.
As a percentage of gross domestic product (GDP), the BSP said external debt remained at a "prudent level" at 29.8 percent, lower than the 30.6 percent as of end-September.
"This improvement in the ratio was driven by the decline in external debt levels in conjunction with the Philippine economy's 5.2 percent real GDP growth for the fourth quarter of 2024 and 5.6 percent growth for the full year 2024," it said in a statement.
Dollar gains decreased the value of the country's debt stock by $1.29 billion in the last three months of the year, the BSP said. The greenback, it added, strengthened as the US economy improved and markets reacted to the Federal Reserve's policy outlook and a likely shift in US trade and investment policies following Donald Trump's return to the White House.
"The same underlying factors may have also triggered non-residents to offload Philippine debt securities, further lowering outstanding external debt by $835.33 million," the BSP said.
Foreign borrowings in the last three months of 2024 also reversed from net availments recorded in the first three quarters of the year.
October-December saw a net repayment of $133.51 million net repayment, said to have been driven by the lower net availments by non-bank public sector entities ($178.62 million) as well as net repayments by private sector non-banks ($212.85 million) and the banking sector ($99.27 million).
Prior adjustments, meanwhile, added $242.74 million to total debt.
The debt service ratio — a measure of the country's ability to pay debt that compares debt payments to export earnings — rose to 11.5 percent for the period from 10.3 percent.
Gross international reserves stood at $106.26 billion, the BSP said, providing 3.81 times cover for short-term debt.
Public sector external debt totaled $85.34 billion, down from $86.88 billion as of end-September, due to foreign exchange valuation effects, adjustments and net repayments.
Private sector debt also declined slightly to $52.29 billion from $52.76 billion, which was attributed to local investors buying back offshore debt, foreign exchange valuation losses and loan repayments.
Despite the fourth-quarter decline, external debt increased by $12.23 billion, or 9.8 percent year-on-year, from $125.39 billion in 2023. This was driven by net borrowings of $9.61 billion to support both public and private sector liquidity needs, as well as foreign investors' increased holdings of Philippine debt securities earlier in the year.
An increase in non-resident purchases of Philippine debt securities earlier in the year also contributed, along with prior period adjustments. However, foreign exchange losses from currency movements helped temper the increase, reducing the debt stock by $1.39 billion.
External debt remained predominantly medium- and long-term, accounting for 79.7 percent of the total debt stock.
The weighted average maturity for these borrowings stood at 16.7 years, with public sector loans averaging a longer 19.6 years compared to 7.7 years for the private sector.
Short-term liabilities, consisting mainly of trade credits and bank borrowings, made up 20.3 percent of the total.
Loans from official sources, including multilateral and bilateral creditors, had the largest share of $54.12 billion or 39.3 percent of total outstanding obligations.
Bonds and notes followed closely at $45.11 billion, representing 32.8 percent of external debt, while obligations to foreign banks and other financial institutions amounted to $31.22 billion or 22.7 percent. The remaining 5.2 percent, or $7.18 billion, came from suppliers and other creditors.
Japan remained the country's top creditor, with outstanding loans reaching $15.18 billion. Singapore and the Netherlands followed, holding $5.06 billion and $4.55 billion in Philippine debt, respectively.
In terms of currency mix, the external debt stock was predominantly denominated in dollars, accounting for 74 percent of the total, followed by the peso at 9.2 percent and the yen at 7.5 percent.
Other foreign currencies, including the euro and special drawing rights with the International Monetary Fund, made up the remaining 9.3 percent.