MANILA – Debt repayment was costlier last year due to rising interest rates and the depreciation of the peso, the Bangko Sentral ng Pilipinas (BSP) reported.
“What is clear is that interest rates are rising and emerging market currencies have been depreciating versus the United States dollar (USD),” according to 2017 Philippine Financial Stability Report (FSR).
“These must mean that debt servicing is now at a higher cost than in the past, separate from the issue of having more outstanding debt. This is our central financial stability issue,” it said.
Debt service, as defined by Investopedia, is the cash required to cover the repayment of interest and principal on a debt during a particular period.
The US Federal Reserve raised the benchmark interest rate by 25 basis points to between 1.25 percent and 1.5 percent last year.
Meanwhile, the Philippine peso closed 2017 at P49.930:$1, or 21 centavos weaker than the P49.720 during the last trading day of 2016.
To address the rising cost of debt service, the BSP has floated several measures in the market.
“There is a package of measures that we have exposed to the markets and the market has already commented,” central bank assistant governor Johnny Noe Ravalo told reporters.
“Comments have all been addressed and we will try to move forward as quickly as possible,” he said. (GMA News)
