The news of the country's debt nearing P15 trillion is undoubtedly alarming. It raises the question of why the government continues to borrow extensively, despite its significant indebtedness.

While many Filipinos tend to avoid borrowing, viewing debt as inherently negative and a sign of poor financial management, the situation raises the question: Is this the case for the Philippines?

By the end of last year, the national government's debt had soared to a historic P14.62 trillion. If distributed among the population, each Filipino would carry a debt burden of P134,128.

However, the government is encouraging the public to view these substantial debt levels from a different perspective.

The Department of Finance contends that solely examining the absolute amount of debt presents a misleading portrayal of the country’s fiscal position.

During his first press conference as finance secretary, Ralph G. Recto immediately stated that the record debt did not overly concern him, asserting that it "remains at a very manageable level.”

That was not the first time a finance secretary has downplayed the government's mounting nominal debt.

Recto's predecessors also showed little concern over the ongoing rise in debt, emphasizing the significance of the "debt-to-GDP" ratio.

So, what exactly is the debt-to-GDP ratio? It measures the government's total debt against the size of the country's economy, also known as gross domestic product (GDP), or its capacity to generate income.

This ratio is a closely watched indicator for investors as it reflects the Philippines' ability to repay its debt.

A high debt ratio of a country signifies its potential challenges in repaying the debt, lower economic stability, and a higher risk of financial crisis.

Data from the Bureau of the Treasury revealed a nine percent increase in the government's debt from January to December last year, amounting to staggering P1.197 trillion compared to 2022.

However, despite this significant surge, the government's debt-to-GDP ratio moved in the opposite direction, declining from 60.9 percent in 2022 to 60.2 percent last year

What does a lower debt-to-GDP ratio signify? It implies that the country's economic expansion in 2023 was surpassing its debt buildup.

To put the debt-to-GDP ratio in terms of an ordinary person's life, former Finance Secretary Diokno had suggested to think about it in relation to personal finances, and to compare someone’s own debt to his annual income.

To illustrate the point, an accumulated debt of P10 million would not be so burdensome for an individual with a yearly income of P25 million. However, it would pose a significant problem for someone earning only P5 million.

Nevertheless, the current debt-to-GDP ratio still slightly exceeds the 60-percent threshold considered manageable for developing economies like the Philippines.