State’s outstanding debt rose 5.5% in Nov.

The government’s debt stock rose further in November as the state continued to rely on borrowings to partly fund its expenditure requirements.

The Bureau of the Treasury on Monday reported that the government’s outstanding debt amounted to P5.68 trillion as of the end of November—up by 5.5 percent year-on-year.

Debt resulting from domestic borrowings accounted for a bigger share of the debt stock at P3.74 trillion. This amount was up by 9.9 percent year-on-year.

Foreign liabilities accounted for the rest at P1.93 trillion, declining by 2.2 percent year-on-year.

National Treasurer Rosalia de Leon said the government borrowed less from foreign sources to limit its exposure to foreign exchange risks.

In fact, she said, the government decided not to sell bonds in the international capital market last year.

The government limited its foreign borrowings last year by tapping only official development assistance (ODA), which are much cheaper than commercial loans.

The country’s biggest providers of ODAs are the Japan International Cooperation Agency, the Asian Development Bank and the World Bank.

The Aquino administration’s economic team has adopted the practice of deficit spending, abandoning the previous administration’s medium-term goal of achieving an annual budget surplus.

President Aquino’s economic officials said the economy needed a boost from robust public spending, explaining that a manageable annual government deficit would not hurt the country.

Although the government’s liabilities continue to rise, these obligations have become more manageable, finance officials claimed. This is because the growth of the economy has been outpacing the rise in the government’s debt stock.

As a consequence, they said, the proportion of the country’s outstanding debt to its gross domestic product (GDP) has gone down.

From a peak of 76 percent in 2004, the debt-to-GDP ratio fell to an estimated 49.6 percent in 2013.

Last year marked the first time that the ratio fell to below 50 percent since the Asian financial crisis.

Based on international standards, a 50-percent ratio of debt stock to GDP may be considered comfortable.

With the sustained drop in the debt-to-GDP ratio, the Philippines last year secured its first ever investment grade from the three biggest international credit agencies.

Fitch Ratings was the first to upgrade the Philippines’ investment status. It raised its rating for the country by a notch from junk status to the minimum investment grade of BBB- in March 2013.

Standard & Poor’s and Moody’s Investors Service followed Fitch’s lead in May and October last year, respectively.

Apart from the improving manageability of the government’s debt stock, the credit watchdogs cited the country’s growing economy, benign inflation, rising foreign exchange reserves, and stable banking system.  Michelle V. Remo