June debt-to-GDP ratio remains above 60%

PHOTO INVESTIGATOR / GRIG C. MONTEGRANDE

Faster accumulation of debt even as the economy returned to year-over-year growth further raised the Philippines’ debt-to-gross domestic product (GDP) ratio in June to 60.4% , a peak in 16 years and above the level envisioned by Manageable Debt Watch for emerging markets.

The latest Treasury Office data on Tuesday showed that the debt-to-GDP ratio, which reflected a country’s ability to repay its bonds, had risen slightly from the adjusted 60.3% at the end of March. The debt-to-GDP ratio for the first quarter was also 60.4%, but it was adjusted downwards after the government revised the GDP contraction from January to March to 3.9% year-on-year from 4.2 % previously.

Outstanding debt at P11.17T

The debt-to-GDP ratio at the end of June was the highest since 65.7% recorded in 2005.

At the end of the first six months, the national government debt stock stood at a record 11.7 trillion pesos, up 23.3 percent year-on-year.

The government said on Tuesday that GDP returned to year-over-year growth in the second quarter, with output rising 11.8% from a low last year when 75% of the economy shrank. was arrested at the height of the region’s strictest COVID-19 containment. from mid-March to May 2020. Thus, GDP growth in the first half was on average nearly 4%, exceeded by the increase in debt.

At the end of June, the share of domestic debt in GDP fell to 43% from 43.4% a quarter ago, while external debt in GDP rose to 17.5% from 17% in March .

Finance Secretary Carlos Dominguez III said the Philippines would end the year with a debt-to-GDP ratio of 59.1 percent, the equivalent of outstanding debt of 11.5 trillion pesos.

Moody’s projections

The debt ratio is expected to reach 60.8% in 2022, before falling to 60.7% in 2023 and 59.7% in 2024.

Last week, Moody’s senior vice president and senior sovereign analyst for the Philippines, Christian de Guzman, told a press briefing that general government (GG) debt – the combined bonds of the national government, local governments and social security institutions, minus their bond holdings – was estimated. to less than 50% of GDP in 2020, which is even lower than similar Philippines Baa2 rated like Uruguay, Colombia, Panama and Mauritius. GG’s median debt ratio among Baa2 grade sovereigns was around 65%.

Moody’s predicts that the GG debt of the Philippines will exceed 50% of GDP in 2021 and 2022.

De Guzman said debt affordability for the Philippines has remained stable, even as it wiped out its debt consolidation gains before the pandemic as the government increased borrowing to fight COVID-19 since the last year.

In terms of fiscal measures, Moody’s said the Philippines’ numbers have remained “relatively strong relative to their Baa2-rated peers.” INQ

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