PH debt-to-GDP ratio dropped in 2013

MANILA, Philippines—The Aquino administration’s effort to get its finances in order continues to pay off as the state’s outstanding obligations declined at the end of last year, according to official data released Friday.

The government’s debt, relative to the size of the economy, dropped to below 40 percent last December as a result of more efficient spending and prepayments of obligations, the Department of Finance (DOF) reported this week.

“The continuing trend of decreasing … debt shows the government will ensure sustained fiscal space throughout the medium term,” the DOF said in a statement.

As of December 2013, general government debt stood at P4.53 trillion, or 39.2 percent, of gross domestic product (GDP).

The year ended with a lower debt-to-GDP ratio compared to that in December 2012, which stood at 40.6 percent, or the equivalent of P4.29 trillion.

While the absolute level of debt increased during the period, it was outpaced by the growth of the economy, which expanded by 7.2 percent last year.

The debt ratio was also an improvement from the 44.3 percent registered in 2009.

The decline in the government’s debt level can be attributed to the ongoing fiscal consolidation, the DOF said.

Last year, the state’s budget deficit stood at just 1.3 percent of GDP.

Favorable domestic funding conditions also allowed the government to shift more of its borrowings to peso-denominated loans. The weaker peso would have inflated the value of foreign obligations held by the government.

Of the P554.7 billion the government borrowed last year, 94 percent was sourced from the domestic market, while the remaining 6 percent were concessional foreign loans from development partners. This helped the government reduce its foreign debt component to just P1.95 trillion, or 34.3 percent of the total outstanding government debt.

The decline in the local governments’ obligations in 2013 to P71 billion, from P73.4 billion in 2012, also helped reduce the debt-to-GDP ratio. Likewise, the intrasector debt holdings of local governments in 2012 was trimmed from P3.1 billion to P300 million in 2013.