Debt-to-GDP ratio up 44% in March

The size of the national government's obligation relative to the economy or debt-to-gross domestic product (GDP) ratio expanded 44.0% as of end-March on the back of the increase in domestic debt.

In its economic bulletin, the Department of Finance (DOF) said the debt-to-GDP ratio for the period is higher compared to 42.6% recorded as of end March 2018.

Domestic debt rose from 27.6% to 29.3%, while external debt dipped to 14.7% from 14.9% year-on-year.

The increase in domestic credit resulted from the government's shift to local sources of borrowing to reduce foreign exchange risks.

Net debt-to-revenue ratio dropped from 249.7% to 238.3% and net debt-to- expenditure ratio, from 214.6% to 203.7% implying the economy’s higher capability to pay.

Interest payments as percentage of GDP, meanwhile, increased slightly from 2.48% to 2.56% due to higher interest rates as the US Fed ended its quantitative easing and normalized its monetary policy.

"Proactive debt management has afforded the Philippines an expanded fiscal space as the level of debt has declined significantly from 87.2% of GDP in 2006 to 41.8% in 2018 —a 45.4 percentage point decline," the DOF said.

It said first quarter debt statistics show the continuation of the favorable trend toward debt reduction.

"These favorable numbers indicate that fears of a forthcoming debt crisis are unfounded," it said.  —Ted Cordero/LBG, GMA News