The outstanding obligations of the national government (NG) as percent of local output, or the GDP, eased further in 2015, with NG debt equal only to 44.8 percent of GDP, based on latest data from the Department of Finance (DOF).
This, compared with year ago NG debt amounting to 45.4 percent of GDP and a validation of the commitment of the economic managers to cut the debt burden as low as can be managed.
According to the DOF, NG debt outstanding at the end of 2015 stood at only P5.954 trillion. This was higher by 3.8 percent, or by P219.30 billion from outstanding NG debt at end-2014.
Month-on-month, a slight increase of 0.03 percent, or P1.92 billion, was recorded relative to the previous month’s level.
With full-year GDP growth reaching 5.8 percent, debt in proportion to GDP has kept a gradual tapering to 44.8 percent in 2015, from 45.4 percent last year.
The improvement in the debt-to-GDP ratio, a measure of sustainability, can be attributed to the sustained accelerated pace of economic growth in tandem with disciplined fiscal spending that moderated borrowing requirements for the year.
Finance Secretary Cesar V. Purisima said, “The Philippines is fully committed to a proactive liability-management strategy to keep our debt structure resilient. I am optimistic we can further trim down our debt-to-GDP ratio, which from 52.4 percent in 2010 has narrowed to 44.8 percent in 2015, a 7.6-percentage-point (ppt) difference.”
NG domestic debt amounted to P3,884 trillion, 1.7 percent, or P63.78 billion higher than the end-2014 level. Relative to November 2015 figures, domestic debt decreased by 0.3 percent, or P11.33 billion, due to the net redemption of government securities amounting to P11.35 billion, offsetting the P0.02-billion upward adjustment in peso value of foreign currency domestic liabilities due to peso depreciation.
NG external debt increased by 8.1 percent, or P155.52 billion year-on-year to P2.070 trillion, amounting to 15.6 percent of GDP—a 6.6-ppt reduction from 2010’s 22.2 percent.
Month-on-month, external obligations grew by 0.6 percent, or P13.25 billion. This was due to the combined effect of net availments worth P3.81 billion and peso depreciation as dollar and third currency-denominated debt gained P2.18 billion and P7.26 billion in local currency valuation, respectively.
“A challenging external environment calls for consistent discipline in making sure productive debt works in our favor. We will continue to stretch average maturities reasonably [now at 10 years] and keep a healthy preference for domestic financing [now at 67 percent],” Purisima said.
NG guaranteed obligations amounted to P438 billion, which increased by 2.7 percent, or P11.68 billion, from a year ago. Month-on-month, guaranteed debt decreased by 0.5 percent, or P2.38 billion, due to net repayment on guarantees amounting to P5.29 billion. This reversed the effect of currency fluctuation that raised the peso value of guarantees by P2.91 billion.
“The average Filipino now lives in a time when news about government debt, usually a headache to all, is now one of many examples of consistent year-on-year improvement being made by our country. We hope this trajectory of better and better news can be kept for the next six years and beyond,” Purisima said.