Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort
MANILA – The Philippine government’s debt is expected to remain sustainable in the next years as it is still below the international threshold of 60 percent of domestic output.
On Thursday, the Bureau of the Treasury (BTr) reported that the total outstanding liabilities of the government amounted to PHP9.368 trillion as of end-September 2020, lower than month-ago’s PHP9.615 trillion after the government paid its PHP300 billion short-term borrowing from the Bangko Sentral ng Pilipinas (BSP).
Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort said the country’s debt-to-GDP (gross domestic product) ratio remains low compared to countries with similar credit ratings.
He said this is among the factors why debt raters affirmed the Philippines' credit ratings amid the pandemic.
Economic managers forecast debt to account for half of the country’s total output by 2022 due to higher requirements to address the pandemic and finance the recovery program.
Ricafort said this level is still acceptable, citing that the external debt-to-GDP ratio as of end-June this year is lower at 23.7 percent.
“The increase in the government’s debt would remain sustainable in the coming years for as long as the debt-to-GDP ratio does not breach above 60 percent, which is considered an important international threshold,” he said.
Ricafort said the government continues to have buffers for managing its foreign liabilities, citing the record-high gross international reserves (GIR) amounting to around USD100.5 billion as of last September.
He said the country’s foreign reserves to date is equivalent to 10 months’ worth of imports of goods and payments of services and primary income, way higher than the international standards of a three to four months cover.
“Thus, the Philippines still has leeway to manage higher government spending and wider budget deficits largely for Covid-19 programs and also amid reduced government tax revenues due to Covid-19, while maintaining a delicate balance of having favorable credit ratings,” he added. (PNA)
