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MANILA – An economist said the Philippine government continues to have leeway on the proportion of debt to gross domestic product (GDP) despite hitting a 14-year high in 2020 on account of pandemic-related borrowings.
In a report, Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort said the rise of government debt-to-GDP ratio to 54.5 percent last year from 39.6 percent in end-2019 remains below the international acceptance threshold of 60 percent of domestic output.
The current ratio, he said, gives the government “greater leeway to increase spending, budget deficits, and increase the overall debt stock.”
Data released by the Bureau of the Treasury (BTr) Tuesday showed that the government’s outstanding debt as of end-2020 amounted to PHP9.795 trillion, higher than the PHP7.73 trillion in end-2019.
The bulk of the liabilities is accounted for by domestic borrowings at PHP6.694 trillion, while the balance of PHP3.1 trillion is accounted for by foreign currency-denominated loans.
The BTr attributed the rise in the government’s outstanding debt to higher requirements for programs related to programs that will address the impact of the coronavirus disease (Covid-19) pandemic.
Citing economic managers’ target, Ricafort said the government’s debt-to-GDP ratio target for this year is 58.1 percent or total outstanding liabilities of around PHP11.982 trillion, while it is targeted to rise further to 59.9 percent in 2022 with the liabilities seen to increase to PHP13.6 trillion.
The government’s borrowing plan this year amounts to PHP3.025 trillion, while it is PHP2.32 trillion next year.
“The Philippine national government debt-to-GDP ratio is expected to hover/move towards the 60 percent threshold from 2021-2022, after the 14-year high of 54.5 percent of GDP in end-2020, but still better/lower compared to other Asean/Asian countries,” Ricafort said.
Amidst the programmed increase in government borrowings this year, he said “gross international reserves (GIR) provide more than enough buffers for managing external/foreign debt.”
As of end-2020, the government’s foreign reserves reached USD110.12 billion, which is equivalent to 11.8 months’ worth of imports of goods and payments of services and primary income. (PNA)
