MANILA, Philippines - The country’s capability to service its debts has improved significantly with the government’s outstanding obligations falling below the 50 percent international benchmark.
Data from the Department of Finance showed that the ratio of consolidated general government debt to gross domestic product (GDP) - a measure used by many debt watchers to assess the creditworthiness of governments - stood at 39.7 percent or P4.47 trillion as of end-September last year.
The figure was lower than the 40.3 percent recorded in the same period in 2012 it was also the lowest level recorded since the Philippines adopted the measurement in 1998.
Finance Secretary Cesar Purisima attributed the declining debt-to GDP ratio to the government’s policy of structural fiscal sustainability.
“Before President Aquino took office, GG debt to GDP was 44.3 percent in 2009. By reducing government debt, we are attempting to ensure the sustainability of our recent economic resurgence,” Purisima said.
On a quarter on quarter basis, the current government debt was slightly higher than the P4.315 trillion registered as of June 2013.
Under the consolidated general government debt, the obligations of the Philippine government, the Central Bank Board of Liquidators, social security institutions (SSIs) and local government units are taken into account.
The consolidated debt also nets out public holdings of government securities, including the Bureau of the Treasury’s bond sinking fund (BSF).
The reduction of the ratio of consolidated debt to GDP was also due to the government’s decision to buy more debt from domestic sources at cheaper interest and longer maturities.
Of the total NG debt as of the end of the third quarter, 66 percent came from domestic lenders while the balance of 34 percent came from foreign creditors.