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Philippines: Debt-to-GDP ratiorises to 38% in Q1
MANILA, Philippines — The share of the consolidated general government (GG) debt to gross domestic product (GDP) rose to 38 percent in the first quarter from 36 percent as of end-2018, the Department of Finance (DOF) reported yesterday.
According to data from the DOF, general government debt as of end-March amounted to P6.7 trillion, 7.1 percent higher than the P6.3 trillion level recorded by the end of the previous quarter.
This outpaced the growth in the country’s GDP during the first quarter, which settled at 5.6 percent due to slower spending brought about by the delay in the passage of the 2019 budget.
General government debt includes the outstanding debt of the national government, social security institutions (SSIs), the Central Bank Board of Liquidators (CB-BOL), and local government units (LGUs), minus intra-sector debt holdings of government securities, including those held by the bond sinking fund (BSF).
Debt-to-GDP ratio is an indicator used by debt watchers and credit rating agencies to assess a country’s debt sustainability. A lower ratio indicates the government is generating more resources than debts, giving it more payment capacity.
Of the total debt stock, the DOF said the bulk or P4.2 trillion came from domestic lenders, while the remaining P2.5 trillion was borrowed from external sources.
The DOF said national government debt, net of the bond sinking fund grew by 14.2 percent to P7.3 trillion from P6.4 trillion last year. This was mainly driven by domestic debt, which grew by 16.4 percent, while external debt increased by eight percent.
Local government debt likewise climbed by 5.4 percent or P5 billion compared to the end of 2018 level.
Meanwhile, SSIs, such as the Government Service Insurance System (GSIS) and the Social Security System (SSS) did not contribute to the debt stock, but increased their intra-sector holdings of government securities by 63.4 percent.
The government borrows from both domestic and external lenders to plug the expected deficit in its budget, which is capped at 3.2 percent of this year’s gross domestic product (GDP).
According to data from the Bureau of the Treasury, the national government’s outstanding debt slightly eased to P7.91 trillion as of the end-September from P7.94 trillion in the previous month, owing to currency fluctuations and the net repayment of matured external and domestic obligations.
This is projected to settle at P7.85 trillion by the end of 2019, and continue to increase to P8.77 trillion by the end of 2020, based on the DBM’s latest Budget of Expenditures and Sources of Financing (BESF) document.
Source: https://www.philstar.com/business/2019/11/08/1966842/debt-gdp-ratiorises-38-q1#2OLrkZRRfdcf51OV.99