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Philippines: Government debt-to-GDP ratio eases in 2019
MANILA, Philippines — The ratio of the country’s consolidated general government debt to gross domestic product (GDP) slightly eased to 34.1 percent in 2019 on the back of the government’s prudent debt management strategy, according to the Department of Finance (DOF).
In a statement, the DOF said the general government debt as of end-December 2019 amounted to P6.65 trillion, up by 5.9 percent from the end-2018 level of P6.28 trillion.
Despite the increase, the DOF said the general government debt as a percentage of GDP declined by 0.3 percentage points to 34.1 percent in 2019 from 34.4 percent in 2018.
“The improved general government debt-to-GDP ratio was partly a result of the decline in the national government debt-to-GDP ratio, from 39.9 percent in end-December 2018 to 39.6 percent in the same period last year,” the DOF said.
“The combination of prudent cash and debt management and steady economic growth has continuously brought down the national government debt-to-GDP ratio in recent years,” it said.
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 debt, giving it more payment capacity.
According to the Philippine Statistics Authority, the economy expanded by six percent in 2019, higher than the previous estimate of 5.9 percent.
Meanwhile, the DOF said nearly 62 percent, or P4.11 trillion, of the total general government debt came in the form of domestic borrowings, while the remaining 38.2 percent or P2.54 trillion was borrowed externally.
The national government’s debt, net of the bond sinking fund, stood at P7.17 trillion last year, 5.6 percent higher than the P6.79 trillion recorded in 2018.
Both domestic and external debt increased year-on-year by 6.6 and 3.7 percent, respectively, the DOF said.
“Local government debt increased by 13.8 percent or P13 billion compared to the 2018 level,” the agency said.
SSIs, such as the Government Service Insurance System and Social Security System, did not contribute to the debt stock, but increased their holdings of government securities by 3.1 percent compared to the 2018 level, according to the DOF.
Source: https://www.philstar.com/business/2020/08/03/2032442/government-debt-gdp-ratio-eases-2019