DOF: Gov't debt, fiscal metrics improved in Q3
At A Glance
- The Department of Finance (DOF) said the country's debt and fiscal metrics improved in the third quarter due to a strong economic performance.<br>The debt-to-gross domestic product (GDP) ratio decreased to 60.2% in September 2023, an improvement from the previous quarter's 61.0 percent and a significant drop from 63.6 percent a year ago.<br>The government's debt as a share of GDP is close to the 60 percent threshold considered manageable for developing economies.<br>The budget deficit-to-GDP ratio also narrowed to 5.71 percent in the third quarter. However, it rose from the previous quarter's 4.77 percent.<br>The government aims to end the year with a 61.2 percent debt-to-GDP ratio and bring it below 60% by 2025.<br>The government has set a budget deficit ceiling of P1.499 trillion for 2023, equivalent to 6.1 percent of GDP.<br>The Development Budget Coordination Committee maintains optimism about reaching its macroeconomic goals this year.
The Department of Finance (DOF) has reported that the country's debt and fiscal indicators improved in the third quarter owing to the robust economic performance.
As of September 2023, the government's debt-to-gross domestic product (GDP) ratio, a measure of the country's debt relative to its economic output, stood at 60.2 percent, according to the DOF.
This level brings the government's debt as a percentage of GDP close to the 60 percent threshold considered manageable for developing economies by multilateral lenders.
Compared to the preceding quarter's ratio of 61.0 percent, and the same period last year when it reached 63.6 percent, the end-September ratio represents a significant improvement, the DOF said.
The decrease in the debt-to-GDP ratio indicates that the economy's growth is surpassing the accumulation of debt, which is a positive indication of the country's overall financial well-being.
In addition, the ratio of budget deficit to GDP, which measures the variance between government expenditure and revenue as a percentage of the economy, settled at 5.71 percent in the third quarter.
This marks a significant decrease compared to the corresponding period in the previous year, when it reached 6.45 percent.
The decline in the deficit signifies that the government has successfully managed to restrain spending and augment revenue, resulting in a more secure fiscal stance.
Nevertheless, the deficit-to-GDP ratio recorded between the July and September period is an increase from the preceding quarter's 4.77 percent.
Earlier, Finance Secretary Benjamin E. Diokno said the government was on track to meet its growth and fiscal targets outlined in the Medium-Term Fiscal Framework (MTFF), given the better-than-expected revenue performance.
The government's target is to achieve a debt-to-GDP ratio of 61.2 percent by the end of the year and subsequently bring it below 60 percent by 2025.
Furthermore, the government has set a budget deficit ceiling of P1.499 trillion for 2023, equivalent to 6.1 percent of the GDP.
The Development Budget Coordination Committee, an inter-agency body responsible for setting the government's macroeconomic assumptions, recently expressed its positive outlook and maintained optimism about attaining the macroeconomic goals for the current year.