The share of the national government’s debt to gross domestic product (GDP) further declined to 41.7 percent in the third quarter as economic expansion outpaced the increase in obligations.
In an economic bulletin yesterday, Finance Undersecretary and chief economist Gil S. Beltran said the debt-to-GDP ratio was down from 42.4 percent in the second quarter and 43 percent in the third quarter last year.
The debt-to-GDP ratio measures the capacity of economies to pay debts. Economic managers had projected the ratio to slide to 37.7 percent when President Duterte steps down in 2022.
The government on Thursday reported that the GDP grew 6.9 percent in the third quarter of the year, exceeding expectations and making the Philippines the second fastest-growing economy in emerging Asia.
The nine-month average GDP growth of 6.7 percent exceeded the 5.9-percent year-on-year increase in the government’s outstanding debt to a record-high of P6.444 trillion as of September.
The share of domestic debt to the economy improved to 27.1 percent in the third quarter from 27.7 percent a quarter ago and 27.6 percent a year ago.
The external debt to GDP ratio also declined to 14.6 percent from 14.8 percent at end-June and 15.4 percent at end-September last year.
“Solid macroeconomic fundamentals will continue to support the country’s robust economic growth. The strong fiscal position backed up by robust revenue collection will support double-digit expansion in public construction which is one of the main pillars of growth,” Beltran said.
In the third quarter, the share of combined tax and nontax revenues to the economy inched up to 16.4 percent from a quarter ago’s 16.3 percent and a year ago’s 15.7 percent.
The share of government expenditures on public goods and services to GDP, however, slightly eased to 18 percent in the third quarter from 18.1 percent a quarter ago and 18.3 percent a year ago.
“Greater investments in infrastructure and social services such as education, health, and social protection will sustain a higher long-term growth path and translate the same into inclusive development. In this regard, the passage and implementation of fiscal reforms to finance these game-changing investments is most urgent,” Beltran said.