THE GOVERNMENT’S DEBT STOCK is expected to fall below the threshold of 50 percent of gross domestic product by 2009, one year ahead of the original schedule, due to higher revenue collection.

This was according to the Department of Finance, which said the government’s debt-to-GDP ratio, a closely watched economic indicator, would likely settle at 45 percent next year from the projected 50.2 percent this year.

According to international standards observed by credit-rating agencies and foreign portfolio investors, a country’s debt stock must be equivalent to a maximum of 50 percent of GDP to be considered manageable.

Should a 45-percent debt-to-GDP ratio be achieved next year, it would be the first time since the Asian financial crisis of the late 1990s that the debt stock will fall below the threshold.

The expected debt-to-GDP ratio of 45 percent next year would be a result of the projected debt of P3.91 trillion and estimated gross domestic product of P8.68 trillion.

The government’s high debt levels over the years were largely the reason why the country could not get an investment-grade status from credit-rating firms.

Debt-to-GDP ratio measures a country’s ability to service its obligations, and thus its credit-worthiness.

It is computed by dividing outstanding debt by the country’s GDP.

The most common measure of an economy, GDP is the sum of all the values of goods produced and services rendered within an economy in a given period.