MANILA, Philippines—The Bangko Sentral ng Pilipinas is urging the government to continue implementing debt-management strategies, saying that the sustained improvement in the country’s fiscal situation is crucial in achieving long-term growth objectives.
In a study titled, “Public Debt and Fiscal Consolidation,” the BSP acknowledged the prudence of debt-management strategies recently implemented by the government. It said these should be continually pursued to achieve a robust and sustainable economic growth.
The government had set a 5- to 6-percent economic growth this year and at least 7 percent in the succeeding years throughout the medium term.
These strategies include the issuance of peso-denominated bonds in the global market and the bond swaps. The former helps reduce the country’s exposure to foreign exchange risks, while the latter allows the government to exchange about-to-mature bonds with ones having longer maturity which allows payment flexibility.
The BSP said such programs would help continue improving the country’s fiscal situation, which it said was important to boost economic growth. A favorable fiscal position is important because it boosts investor confidence, thereby attracting investments, and improves the government’s capacity to fund development projects and programs without harming its credit standing.
“It is paramount that fiscal policy remains relevant and supportive of long-term economic progress. This can be achieved through the efficient management of public sector debts to minimize medium- and long-term expected costs of funding the government’s activities,” the BSP said in the study authored by Roy Hernandez.
The BSP said in the study that the attainment of a country’s economic development targets required both sound monetary and fiscal policies.
Earlier, the BSP said it would keep monetary policy supportive of both the country’s goals on growth and price stability.
Earlier this year, the BSP had raised its key policy rates by a total of 50 basis points in an effort to curb inflation. But the central bank hinted it might no longer implement another rate hike this year to help boost the economy’s growth, which slowed down to 4 percent in the first semester of this year from more than 8 percent in the same period last year.