The outstanding debt of the national government, local governments and state-run firms collectively reached P7.4 trillion as of end-2014, lower than the P7.7 trillion reported the previous year, according to data released by the Department of Finance (DOF).
As for the general government (GG) debt—composed of the national government’s obligations as well as the borrowings of the Central Bank Board of Liquidators, local government units and social security institutions, less intrasector debt holdings such as investments of the Bond Sinking Fund and social security institutions in NG securities—it inched up by 1.6 percent to P4.6 trillion as of end-2014 from P4.5 trillion of 2013.
In a statement, the DOF maintained that the slight rise in NG debt at end-2014 “was contained at a very minimal level, resulting from the narrow fiscal deficit and the further deepening of liability management program on the side of the national government.”
The general government debt “held a 60:40 ratio in favor of domestic sources for 2014. Local currency bias in outstanding obligations is in line with our effort to mitigate risk on our debt servicing from adverse foreign exchange fluctuations,” the DOF noted.
The ratio of the general government debt to gross domestic product (GDP) nonetheless improved to 36.4 percent at end-2014, from 39.2 percent in 2013.
The debt-to-GDP ratio is being used by debt watchers as a gauge to determine a sovereign’s creditworthiness. A lower ratio implies improved fiscal management.
As for the outstanding public sector debt (OPSD)—the country’s consolidated debt stock—its share to GDP declined to 58.8 percent at the end of last year from the 66.3 percent recorded in 2013.
OPSD represents the GG debt, plus borrowings of government-owned and/or –controlled corporations, as well as 14 nonfinancial public corporations, net of intrasector debt holdings.
“The improved financial performance of the public corporations, along with higher economic growth, resulted in the drop of their net borrowings as a share of GDP to 22.4 percent [at end-2014] from 27.1 percent in 2013,” the DOF said.
“We are a bright spot amid global economic uncertainty precisely because of our strong fundamentals. We owe this to our proactive liability management,” Finance Secretary Cesar V. Purisima said.