General government (GG) debt relative to the country’s whole economy further declined to 35.4 percent even as the nominal level of debt increased to almost P4.9 trillion in the year’s first semester, according to the Department of Finance (DOF).
The ratio of outstanding GG debt to gross domestic product (GDP) dropped to 35.4 percent by end-June this year, a slight improvement compared to 36.1 percent in the same period last year and 35.8 percent in the first-quarter, the DOF bared.
DOF data showed that the nominal GG debt stood at P4.889 trillion as of June 2016, a 4.3 percent increase from P4.687 trillion in the previous year.
Of the total GG debt, domestic borrowings made up nearly two-thirds of the amount at P2.836 trillion, while funds sourced from overseas lenders reached P2.052 trillion.
GG debt consists of the outstanding obligation of the national government, the Central Bank Board of Liquidators, social security institutions and the local government units (LGUs) minus that held by the Bond Sinking Fund (BSF).
The same DOF data traced the increase in nominal GG debt at end-June to the 2.3 percent rise in outstanding debt held by the national government from the year-ago’s P5.816 trillion to P5.948 trillion at present.
Meanwhile, the national government debt net of the BSF holdings reached P5.299 trillion during the period, up by 3.7 percent compared to P5.110 trillion in the same period last year.
Of the total increment of P188.9 billion, domestic borrowings accounted for P33 billion as a result of lower BSF holdings, while availment of loans and foreign debt insurance, along with the impact of weaker peso, made up the remaining P155.9 billion.
Debt of LGUs, meanwhile, jumped 10.6 percent to P74.7 billion from P67.5 billion in the same period last year.
Intrasector debt holdings were at P485.1 billion as of June, down 1.1 percent from the prior year.
The government debt-to-GDP ratio is an indicator used by debt watchers, such as Fitch Ratings, Moody’s Investors Service and S&P Global Ratings, to assess the creditworthiness of sovereigns.
The Philippine government has already secured investment grade sovereign credit ratings from all three major international credit rating agencies Fitch, Moody’s, and S&P.
All three credit watchdogs gave the Philippines the minimum investment grade in 2013, while S&P followed the move with another notch of upgrade in 2014.
