The country’s outstanding public-sector debt (OPSD) dropped to P7.6 trillion in March, or equivalent to just 64.3 percent of the gross domestic product (GDP) at that time.
This represented a 7-percentage-point decrease from the 71.3 percent in March 2013, indicating that the Philippine economy was able to register robust growth with little dependence on debts.
The Department of Finance (DOF) attributed the decline in the ratio of OPSD to GDP to the actual drop of P79 billion in the OPSD from figures that were registered in December 2013, as well as the high GDP growth rates during the one-year period from March 2013 to March 2014.
The Philippines registered a record 7.2-percent GDP growth by the end of 2013. “The steep decline in OPSD-to-GDP ratio is primarily attributed to the combination of an increase in GDP levels between the intervening period, a decline in Bangko Sentral ng Pilipinas (BSP) borrowings due to the drop in regular and special deposit accounts, and an increase in intrasectoral holdings coming from national government and government-owned and -controlled corporations deposits with the government-owned financial institutions [GFIs], securities held by GFIs and BSP, and GFIs’ deposits at BSP,” the DOF said in a statement.
The DOF said the P79-billion reduction in the OPSD is due to the P91.9-billion, or 1.7-percent decrease in the public-sector domestic debt, which offset a P12.9-billion, or 0.6-percent increase in the public-sector foreign debt.
Nonfinancial public-sector debt went down by 0.6 percent to P5.9 trillion, equivalent to 49.9 percent of GDP.
This is because of the decrease in the debt of the national government and local government units, which fell by P52.7 billion and P2 billion, respectively. The outstanding debt of financial public corporations decreased by 3.5 percent to P3.7 trillion.
The BSP’s debt registered a decrease of 3.6 percent, and also a decline by 3 percent in the debt of the GFIs from December 2013 level.
As of March 2014, 29.3 percent of the OPSD is owed to foreign creditors, while the remaining 70.7 percent is owed to domestic creditors.
National Treasurer Rosalia de Leon welcomed the decline of the OPSD-to-GDP ratio, saying: “As public-sector debt continues its downward trajectory, we are seeing how committing to prudent fiscal management has paved the way to ensure that future generations bear a lesser burden for our nation’s development.”