PH public sector debt declined in first half

The public sector’s debt burden fell further in the first semester, sustaining a trend the Department of Finance (DOF) hoped would continue through 2014.

The proportion of public debt to the country’s gross domestic product (GDP) during the period reached 70.2 percent—an improvement from the 73.1 percent registered in the first half of 2012.

Also, the latest debt-to-GDP ratio was better than the 71.3 percent recorded in the first quarter of 2013.

Public sector debt—a closely monitored indicator of a country’s credit-worthiness—is an account of all the obligations incurred by the national government, local government units, and state-owned companies.

In absolute terms, the combined outstanding debt of various public entities stood at P7.73 trillion as of the end of June—5.2 percent higher than the P7.35 trillion registered in the same period last year. The rise was due to the loans recently taken out by the government and state-owned firms to help finance their expenditure requirements.

But the proportion of the public sector debt to the country’s economy actually contracted because GDP growth outpaced the rise in debt.

In nominal terms, which is taken into account in computing the debt burden, the economy grew by about 9 percent in the first semester.

In real terms, which factors out inflation, the economy grew by 7.7 during the period. It was the fastest rate of expansion in Asia during the period, with China trailing at 7.6 percent.

Finance Secretary Cesar Purisima earlier expressed confidence that the Philippine government would be able to continue improving its fiscal situation.

He also said the government would keep its goal of limiting the budget deficit at or below 2 percent of GDP.

At that rate, Purisima added, the government would be able to better manage its outstanding obligations. Michelle V. Remo