MANILA - The Philippines' debt situation is under control and the country will not exceed its borrowing threshold, the head of the Bangko Sentral ng Pilipinas said on Thursday.

BSP Governor Benjamin Diokno said that as of the end of last year, the National Government’s debt-to-GDP ratio was 54.6 percent--still below the internationally recommended threshold of 60 percent.

Diokno added that economic managers in the Development Budget and Coordination Council are taking care not to cross that limit.

"The DBCC is very careful that we don’t cross that threshold. And in fact, we continue to perform on the revenue side. I’ve seen the numbers. They have collected slightly more than what they have planned,” Diokno said.

Diokno noted that while the external debt ratio is rising, this also remains under control, again based on 2020 numbers.

The country’s total external debt represents 27.2 percent of the country’s gross domestic product in 2020, up from 22.2 percent in 2019, Diokno said.

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Meanwhile, the country’s debt service ratio (DSR), a measure of the adequacy of the country’s forex earnings to meet maturing obligations, is at 6.3 percent, from 6.7 percent in 2019, the central bank chief added.

"The debt-service ratio in 2020 is less than the 6.7 percent in 2019 due largely to lower payments during the year. These ratios indicate the economy’s strong position to service its foreign borrowings.”

Diokno stressed the debt mix is also ‘well-balanced’ with medium to long-term maturities consisting of about 85 percent of total foreign debt. He added, these loans carried fixed, low-interest rates and are diversified to mitigate currency risk.

Of the total external debt, 56.7 percent is US dollar-denominated, while 11.8 percent is in Japanese yen.

As of May, total foreign borrowings related to COVID-19 response was at $15.5 billion. This includes $1.2 billion from the Asian Development Bank, World Bank, and Asian Infrastructure and Investment Bank for vaccination.

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