Gov't debt ratio eases to 61% in Q1

The national government’s outstanding debt obligations as a share of the country’s economy decreased in the first three months of the year, in line with the Marcos administration’s fiscal consolidation. Finance Secretary Benjamin E. Diokno said on Thursday, May 11, that the quarterly debt-to-gross domestic product (GDP) ratio settled at 61.0 percent as of end-March 2023, down 2.5 percentage points from 63.5 percent last year. However, the end-March debt ratio is still above the 60 percent international threshold deemed by debt watchers as manageable among emerging markets like the Philippines. This ratio is also a measure used by many debt watchers to assess the creditworthiness of governments. The national government debt as a proportion of GDP had ballooned after the previous Duterte administration acquired substantial new debt during the coronavirus pandemic. “The government is committed to a fiscal consolidation path and will continue the implementation of the government’s infrastructure development program of 5 to 6 percent of GDP annually as indicated in the Medium-Term Fiscal Framework (MTFF),” Diokno said. The MTFF aims to bring down the debt-to-GDP ratio to less than 60 percent by 2025 then further down to 51.1 percent in 2028. Last May 8, the Bureau of the Treasury reported that the total outstanding debt of the national government stood at P13.856 trillion as of end-March, an increase of 9.3 percent, or P1.177 trillion, from P12.679 trillion in the same period a year ago. Of that amount, 68.7 percent was sourced domestically while the remaining 31.3 percent were external borrowings. Local debt rose seven percent to P9.513 trillion from P8.868 trillion in the previous year. Month-on-month, the level inched up by 0.8 percent from P9.442 trillion in February. From the end-December 2022 level, domestic debt has increased by P304.78 billion or 3.3 percent. Meanwhile, external debt amounted to P4.343 trillion, higher by 14 percent compared with P3.811 trillion. It also increased 0.8 percent from the February level’s P4.31 trillion. From the end-December 2022 level, the country's external debt has risen by P133.27 billion or 3.2 percent.