The government appears to be on track of its target to reduce the ratio of its debt to gross domestic product (GDP) to 48 percent by the end of the year.
Data from the Department of Finance showed that the government’s debt-to-GDP ratio eased to 48.9 percent in the first quarter from the 51.5 percent recorded at the end of 2012.
The debt-to-GDP ratio, which peaked at 78.1 percent during the Asian financial crisis in 1998, stood at 49.5 percent at the end of 2011.
In February, the administration’s economic managers expected the ratio to ease to 48 percent at the end of 2013 as the government stepped up efforts to manage the country’s debt.
Also, the ratio of consolidated general government debt to GDP—a measure used by many debt watchers to assess the creditworthiness of governments—stood at 40.6 percent of GDP, or P4.3 trillion, as of the end of 2012.
This was the lowest level recorded since the Philippines adopted the measurement in 1998, according to Finance officials.
Under the consolidated general government debt, the obligations of the Philippine government, the Central Bank Board of Liquidators, social security institutions (SSIs) and local government units are taken into account.
The consolidated debt also nets out public holdings of government securities, including the Bureau of the Treasury’s bond sinking fund (BSF).
“The improvement in our debt statistics is the result of our policy of structural fiscal sustainability,” Finance Secretary Cesar V. Purisima said in a statement.
The Finance department attributed the reduction of the ratio of consolidated debt to GDP to the government’s decision to buy back some of the more expensive foreign currency debt using the BSF.
The government also retired the remaining obligations of the defunct Central Bank, and settled some of the debts incurred by social security institutions.
SSIs include the Government Service Insurance System and the Social Security System, which are among the buyers of government securities.
Other SSIs are the Philippine Health Insurance Corp. or Philhealth, Home Development Mutual Fund or Pag-Ibig Fund, Employees Compensation Commission, and the Philippine Charity Sweepstakes Office.