According to the Bangko Sentral ng Pilipinas (BSP), the country’s external debt level is expected to remain manageable despite increased foreign borrowings. It aims to finance efforts by the national government to counter the effects of the COVID-19 pandemic.
In a statement, BSP Governor Benjamin Diokno said that given the fresh round of borrowings made in recent months. Then, the Philippine economy continues to have the capacity to pay off its loans when they come due.
“This is in view of the improvement of the country’s debt manageability. In addition, it achieved through 20 years of critical structural reforms,” he said.
“Along with sound economic management, reforms involving industry and foreign exchange liberalization, tax and debt management, and the financial sector have helped strengthen the regulatory environment. In addition, the economy’s capacity to absorb shocks,” Diokno added.
According to the central bank chief, the Philippines entered the period of health quarantines with a “robust” external debt position.
BSP data showed that the country’s external debt stood at $81.4 billion by the end of March 2020. It was down $2.2 billion from December 2019’s $83.6 billion total.
The external debt figure at the end of the first quarter of 2020 represented 21.4 percent of the country’s gross domestic product (GDP). And then, substantially lower than the 57.3 percent recorded 15 years earlier.
The latest ratio demonstrates the continued strong role of the country. It was in servicing international borrowing.
Aside from this, 83.6 percent of the country’s external debt. It was because of March this year was in the form of medium to long term loans. In other words, foreign exchange spreads out of the requirements for debt payments and more manageable.
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