The country's debt ratio climbed to a 17-year high in the third-quarter this year as new government loans continued to pile up, data from the Bureau of the Treasury revealed.
As of September 2022, the outstanding obligations of the national government as a share of gross domestic product (GDP) hit 63.7 percent, up 1.6 percentage points from 62.1 percent in June. It also rose from 62.1 percent in the second-quarter, 63.5 percent in the first-quarter and 60.4 percent in full-year 2021.
Based on the Treasury data, the latest quarterly debt-to-GDP figure was the highest since 65.7 percent in 2005.
The end-September debt ratio is above the 60 percent international threshold deemed by debt watchers as manageable among emerging markets like the Philippines.
An elevated debt-to-GDP level puts the country’s investment-grade status at risk.
Last October, Fitch Ratings kept its negative outlook for the Philippines amid rising consumer prices, tightening financial conditions, and uncertainty in the global economic environment.
But despite the challenges, Finance Secretary Benjamin E. Diokno said the Marcos administration is determined to bring down the government’s debt ratio to 52 percent by 2027, or below the threshold of 60 percent.
“Right now, national debt to GDP ratio as we expect it to be around 61.8 percent. It will be back to 61.3 percent by 2023 and then go down to 60.6 percent by 2024, and then 59.3 percent by 2025, 57.7 percent by 2026 and 2027 to 52.5 percent,” Diokno said.
“In other words, by the end of the Marcos years, we expect that national debt to GDP ratio to be below 60 percent,” he added.
According to Diokno, debt level of above 50 percent is not detrimental, citing the current global debt to GDP ratio is somewhere between 200 percent and 300 percent.
As of end-September 2022, the national government’s debt stock stood at P13.517 trillion.
“The way out of this is by growing at a faster rate, we have simply outgrow our debt, most of our debt, incidentally, our medium to long term,” Diokno said.
Asked if the Marcos administration is planning to bring back the 39.6 percent debt ratio seen before the pandemic struck in 2022, Diokno said “given where we came from, I think it will be wrong for us to shoot for that level.”
“I think we have to prioritize growth first, to take care of the needs of our people rather than going back to that number. It is not crucial to return to 39, we need to prioritize our growth and the needs of Filipinos,” Diokno said.
Since 2019, the total debt of the national government ballooned from just P7.731 trillion, or 39.6 percent of GDP.
Last April, former Finance Secretary G. Dominguez III said the new administration should avoid accumulating additional debt and prioritize policies that will entice more economic activity.