PH debt burden manageable, says Moody's Analytics

Published May 17, 2021, 5:55 PM

by Lee C. Chipongian

The Philippines’ debt burden is considered manageable versus other countries in the Asia Pacific (APAC) region and even outside of APAC, although there is a noted rise in household and corporate debt as an impact of the COVID-19 pandemic, according to Moody’s Analytics.

In Moody’s Analytics ranking in total debt which includes government, corporate, household and financial sector debt, the Philippines is 55th out of 62 countries based on its debt-to GDP ratio. Its debt of $399.4 billion as of end-2020 was 108.7 percent of GDP.

The country’s total government debt of $177.7 billion which was 48.4 percent of GDP, lands it at No. 44 in Moody’s Analytics listings.

In terms of corporate debt, the Philippines ranked 53rd with $119.7 billion which was 32.6 percent of GDP. As for financial sector debt, it is 45th with $43.3 billion, 11.8 percent of GDP.

In terms of household debt of $58.7 billion or 16 percent of GDP, it ranked 53rd.

Based on its report “The Global Debt Nexus: Surveying the Pandemic Surge in Global Leverage”, Moody’s Analytics said in Southeast Asia, household debt burdens “were broadly stable in the runup to the pandemic” however the pandemic’s “steep economic toll contributed to a spike in household debt in several countries” such as the Philippines whose household debt to GDP has increased last year, along with Thailand, Vietnam, Malaysia and Indonesia.

“Although house prices in Thailand and the Philippines rose in 2020, they did so less rapidly than in the preceding five years, when housing booms spurred the Bank of Thailand and Bangko Sentral ng Pilipinas (BSP) to adopt macroprudential measures aimed at slowing credit growth,” said Moody’s Analytics.

The report also noted that the increase in household borrowing “was driven

by households’ push to bridge income losses through a combination of mortgage, credit card and personal loans.”

As for corporate debt-to-GDP ratio, the Philippines was in the top five in a grouping of 14 which includes Japan, China, Singapore and Hong Kong, while it is sixth in terms of household debt-to-GDP ratio.