Debt-to-GDP ratio expected to hit 64% by year-end

The national government’s debt stock, which was at 60.4 percent of gross domestic product (GDP) in 2021, is expected to have risen in 2022 to approach 64 percent.

This means the year-end debt-to-GDP ratio would have risen by about 4 percentage points this year.

On a quarterly basis, this economic indicator was placed at 63.5 percent in the first three months of 2022, 62.1 percent in the second quarter and 63.7 percent in the third quarter.

At the end of 2021, the government’s outstanding obligations totaled P11.3 trillion. As of the end of November, the debt stock has reached a record P13.67 trillion.

According to First Metro Investment Corp. (FMIC) and the University of Asia and the Pacific (UA&P), the Philippines’ debt ratio will rise slower at 1 to 1.5 percentage points in 2023.

To start the new year, the Bureau of the Treasury (BTr) has laid out for January a borrowing plan of P200 billion that would augment government revenues and fund deficit-spending.

Next month’s borrowing program slates four auctions of Treasury bills with the three tenors at P5 billion each or P15 billion per batch, for a total offer of P60 billion.

The BTr  will also offer P35 billion each for Treasury bonds that will mature in seven years, 10 years, 13 years and 20 years—for a total of P140 billion.

Budget deficit

From January to November this year, the government’s budget deficit amounted to P1.24 trillion, representing a decrease of 7.2 percent from P1.33 trillion in the same period last year.

“We think that the national government will have a full year deficit of only 6.5 percent of GDP and so the debt ratio will likely end up below 64 percent in 2022, a maximum of 66 percent in 2023, with the start of decline by 2024,” FMIC and UA&P said.

“National government spending won’t ease much in 2023, but the debt-to-GDP ratio will likely increase only slightly by 1 to 1.5 percentage points and set the stage for a decline starting 2024,” they added.

FMIC and UA&P noted that the Department of Budget and Management has targeted the debt ratio to fall to 50 percent by 2028, which they said was “a doable plan.”