Debt-to-GDP ratio at 44.8% in 2015, a 7.6 ppt difference from 2010; Purisima optimistic on further narrowing
04 February 2016, Manila, Philippines – The National Government’s (NG) outstanding debt was recorded at P5,954 billion at the end of 2015. This figure is higher by 3.8% or P219.30 billion as compared to the end-2014 level. Month-on-month, a slight increase of 0.03% or P1.92 billion was recorded relative to the previous month’s level.
With full-year GDP growth reaching 5.8%, debt in proportion to GDP has kept a gradual downward trajectory to 44.8% in 2015 from 45.4% last year. The improvement in the debt-to-GDP ratio, a usual 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 remarked, “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% in 2010 has narrowed to 44.8% in 2015, a 7.6 percentage point (ppt) difference.”
NG domestic debt amounted to P3,884 billion, 1.7% or P63.78 billion higher than the end-2014 level. Relative to November 2015 figures, domestic debt decreased by 0.3% 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[1].
NG external debt increased by 8.1% or P155.52 billion year-on-year to P2,070 billion, amounting to 15.6% of GDP–a 6.6 ppt reduction from 2010’s 22.2%. Month-on-month, external obligations grew by 0.6% or P13.25 billion. This was due to the combined effect of net availments worth P3.81 billion and peso depreciation as dollar- and 3rd 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%),” Purisima noted.
NG guaranteed obligations amounted to P438 billion, which increased by 2.7% or P11.68 billion from a year ago. Month-on-month, guaranteed debt decreased by 0.5% 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 6 years and beyond,” Purisima added.
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