The indebted state of the national government pushed past the P5-trillion level for the first time in September last year, latest data from the Department of Finance (DOF) show.
But while the nominal debt level has expanded in rather dramatic fashion, core government debt viewed against the all-important local output or the gross domestic product (GDP) had in fact improved.
Finance Undersecretary Gil S. Beltran said in a statement that the nominal GG debt stood at P5.022 trillion as of September 2016, a 4.2 percent increase from the previous year’s level of P4.819 trillion.
“Domestic borrowings accounted for more than half of the total GG Debt at P2.909 trillion, while the remaining P2.113 trillion were sourced from external lenders,” said Beltran, who is also the DOF’s chief economist.
GG debt covers the outstanding obligations of the National Government (NG), the Central Bank Board of Liquidators (CB-BOL), social security institutions (SSIs) and the local government units (LGUs), minus the intrasector debt holdings of government securities including those held by the Bond Sinking Fund (BSF).
Citing data from the DOF, Beltran revealed that the rise in the nominal debt was mainly due to the 2.5-percent increase in the outstanding NG debt to P6.087 trillion from end-September 2015 level of only P5.936 trillion.
“NG debt net of the BSF holdings meanwhile reached P5.447 trillion, 3.9 percent higher than the P5.242 trillion during the same period in 2015 as a combined result of peso depreciation [which is P1.53 year-on-year] and lower BSF holdings,” he said.
Beltran also pointed out that LGU debt grew by 11.4 percent to P77.3 billion as of September compared to the prior year’s level of P69.4 billion.
“The increase in borrowings are to be used for procurement, financing public services as well as economic enterprises,” he added.
Beltran also said intrasector debt holdings for the month was at P503.1 billion, which was up by 2 percent compared to the previous year’s P493.0 billion, the growth was attributed to the increase in government security holdings of social security institutions which totaled P10.1 billion.
“Lastly, despite the rise in nominal debt, the GG debt-to-GDP ratio has gone down to 35.5 percent from 36.7 percent in [the third quarter of] 2015 due to the sustained improvement in the economy,” he said.
The country’s debt ratio is one indicator used by debt watchers and credit rating agencies namely, Fitch Ratings, Moody’s Investor Service and Standard and Poor’s, to assess debt sustainability which is a factor in evaluating the creditworthiness of a country, according to Beltran.
The GDP ratio as of September 2016 decreased to 35.5 percent coming from 36.7 percent recorded of the same month in 2015, total government debt reached P5.022 trillion for September 2016, according to the DOF.