MANILA - The Philippines' over 60 percent debt-to-GDP (gross domestic product) ratio for 2021 is not a cause for concern, Bangko Sentral ng Pilipinas Governor Benjamin Diokno said Tuesday.
The country's debt-to-GDP ratio was at 40 percent before the COVID-19 pandemic but it has ballooned over the past 2 years as the country borrowed about $10 billion to fund its pandemic war chest, Diokno told ANC.
But most of the country's pandemic loans have long and medium-term repayment schemes with low interest rates, Diokno said.
"I don’t think we should worry about that. I know we have borrowed something like $10 billion because of the pandemic," Diokno said.
"We have seen a much higher debt-to-GDP ratio in the past, because of our fiscal discipline, we were able to cut it to around less than 40 percent...Let’s not worry about it," he added.
Economic growth, seen to reach between to 7 to 9 percent in 2022, can "easily" outgrow the debt growth which is estimated to move up by just 3 to 4 percent this year, he said.
Diokno further allayed fears of rising debt by saying other countries even have a 200 percent debt-to-GDP ratio.
Meanwhile, the country's bad loans are still below expectation which settled at 4 percent. Diokno said the earlier estimate is that non-performing loans could hit 6 percent during the pandemic.
Banks also have a fallback under the FIST (Financial Institutions Strategic Transfer) law where they can offload bad loans.
Lending grew for the 6th consecutive month to 8.5 percent in January 2022, central bank data showed.
Diokno said bank lending is likely to improve as the economy reopens further under the Alert Level 1.
Metro Manila and 38 other areas shifted to Alert Level on March 1 as the daily COVID-19 tally fell below 1,000.