MANILA, Philippines — The country’s debt stock increased in April by 0.4 percent or an additional P54.24 billion to reach another all-time high of P13.91 trillion, according to the Bureau of the Treasury (BTr).
In April, foreign debt increased by 2.5 percent to P4.45 trillion as new borrowings exceeded payments made.
Meanwhile, local debt decreased by 0.6 percent to P9.46 trillion mainly because the government redeemed more securities that it issued that month.
On the other hand, the depreciation of the Philippine peso in April blunted the decrease in outstanding obligations as this added P2.47 billion to the debt stock.
In May, Fitch Ratings revised its outlook on the Philippines national government’s credit rating as a borrower in foreign currencies to “stable” from “negative,” and affirmed the investment-grade level of “BBB.”
READ: Fitch Ratings improves outlook on PH to stable from negative
Fitch Ratings said the revision of the outlook to stable reflected its improved confidence that the Philippines is returning to strong medium-term growth after the Covid-19 pandemic, supporting sustained reductions in the ratio of the government debt to gross domestic product (GDP) which had risen substantially in the past few years.
“The revision also reflects our assessment that the Philippines’ economic policy framework remains sound and in line with ‘BBB’ peers, despite its low scores on World Bank Governance indicators,” the credit watchdog said in a statement.
“The revision comes despite some relative deterioration over the last years in credit metrics that previously had been strengths, including in government debt to GDP and net external debt to GDP.
Data at the BTr show that the government’s debt stock ratio surged from 39.6 percent of GDP before the pandemic in 2019 to 54.6 percent in 2020, 60.4 percent in 2021 and 60.9 percent in 2022.
The foreign debt stock ratio alone rose from 13.3 percent in 2019 to 17.3 percent in 2020, 18.3 percent in 2021 and 19.1 percent in 2022.
“We project [that the national government’s debt stock ratio] will decline to about 59 percent by 2024 on strong nominal GDP growth and narrowing fiscal deficits, after inching up to 61 percent in 2022,” Fitch Ratings said.
As of the end of 2022, the debt stock represented 60.9 percent of gross domestic product. This increased from 60.4 percent at end-2021 and still beyond the 60-percent threshold that is internationally considered as the cap for a prudent debt level.
—RONNEL W. DOMINGO
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