PHL debt-to-GDP ratio declines in third quarter 2013

The ratio of Philippine government debt to economic output fell year-on-year as of the third quarter of 2013, the Department of Finance (DOF) reported Wednesday. 

 

In a statement, the DOF said government debt as of end-September 2013 stood at P4.468 trillion or 39.7 percent of the country's gross domestic product (GDP). 

 

The debt-to-GDP ratio is lower than 40.3 percent in the same period in 2012, but slightly higher than the 39.1 percent posted as of the second quarter. 

 

A lower debt-to-GDP ratio indicates a country's ability to pay back its obligations without incurring more liabilities. It is a measure used by debt watchers to assess the creditworthiness of governments. 

 

“The Aquino Administration continues working towards the virtuous cycle of good governance through proactive liability management,” Finance Secretary Cesar Purisima said. 

 

According to the DOF, the government borrowed more domestically at lower interest rates and longer maturities in the third quarter of 2013 compared with the year previous. 

 

Of the total government debt, 66 percent was domestic and 34 percent foreign, an improvement from 61 percent domestic and 29 percent foreign a year prior. 

 

A decline in local government debt to P70.7 billion or 0.6 percent of GDP from P71.3 billion or 0.7 percent of GDP helped improved the debt-GDP-ratio. 

 

“As a result of these initiatives, we are creating fiscal space in the budget to increase investments in our people, our key driver of economic growth,” Purisima said. 

 

Last year, the Philippines gained a much coveted investment grade rating from all three major global debt watchers, easing the interest rate burden for the government. – Siegfrid Alegado/VS, GMA News