MANILA - A former head of the Department of Finance said the Philippines' national debt may be a cause for worry for investors even though economic managers say it remains manageable.

The Bureau of Treasury on Tuesday announced that the Philippines' sovereign debt had dipped slightly in August to P15.55 trillion, down 0.9 percent or P139.79 billion from July's P15.69 trillion.

Despite this, former Finance Secretary Margarito Teves said it remains a cause for worry.

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"Mas on the bad side yan, parang sumusobra ang gastos mo kumpara sa income (That's more on the bad side because our expenses exceed our income)," Teves said in an interview.  

Teves, who served as Finance chief during the administration of former President Gloria Macapagal-Arroyo said a high debt load means that the country needs to divert funds to pay its obligations--funds that could have been used instead for more productive purposes. When the government borrows money from banks, this also means that there is less money to lend to the private sector, he added.

Economic managers need to ensure that the debt level does not exceed "international prudence standards" according to Teves. 

"Ang ating mga investors nagwo-worry din sila baka mahirapan tayo sa pagbabayad ng utang. Kailangang bantayan natin, huwag nating hayaang sumobra sa tinatawag na international prudence standards."

(Our investors may also get worried because we may find it difficult to pay our debts. We need to be vigilant and not let it exceed what are known as international prudence standards.)

While the country's debt-to-GDP ratio was around 40 percent before the pandemic, this surged to over 60 percent during the COVID-19 lockdowns as the country borrowed heavily to finance its pandemic response.

He also noted that since the end of 2003, the country's per capita debt burden had risen from P129,000 to P134,782.

Teves said while the debt-to-GDP ratio was still manageable, but it would be better if the debt level was brought down further.

“Mas komportable tayo kung mas mababa dahil makakatulong sa pagbaba ng interest rate yan, makakatulong sa ating mga negosyante, makakatulong sa pag-improve ng ating credit rating,” Teves said.

(We will be more comfortable if it [debt-to-GDP] ratio is lower because it will help lower interest rates, help improve our credit rating.)

The Philippines is aiming to get a credit rating upgrade to “A” level before the end of President Ferdinand Marcos Jr.’s term, economic managers have said.

Finance Secretary Ralph Recto also earlier said the debt-to-GDP ratio has dipped from 60.9 percent in 2022 to 60.1 percent in 2023, as economic growth outpaced borrowing.