By Melissa Luz T. Lopez, Reporter

General government debt declined in 2015

Posted on May 28, 2016

GENERAL government (GG) debt relative to the local economy declined further at end-2015 to log the lowest level in nearly two decades, the Finance department said on Friday.

Despite an uptick in nominal value, outstanding GG debt relative to the gross domestic product (GDP) went down to 36.3% in the fourth quarter, improving slightly from the 36.4% logged at end-2014 and the 36.7% posted during the July-September period.

The rate is the lowest since the earliest comparable level in 1998, when it stood at 51.1% of GDP.

GG debt stood at P4.828 trillion at end-December, 4.9% higher than the level a year ago of P4.602 trillion, data from the Finance department showed. Local borrowings made up nearly two-thirds of the total at P2.843 trillion, while funds sourced from offshore credit stood at P1.985 trillion by the end of the year.

GG debt factors in the outstanding debt of the national government minus that held by the Bond Sinking Fund (BSF), local government units (LGUs), the Central Bank Board of Liquidators and social security institutions.

The agency said the increase was due to a P219.3-billion rise in outstanding debt held by the national government net of BSF holdings to hit P5.955 trillion.

Debt of LGUs, meanwhile, also rose by 4.2% to P71.4 billion for the year. Intrasector debt holdings were P499.4 billion, up by 2.1% from the prior year.

Debt watchers monitor a country’s liabilities as a percentage of its economy to assess the creditworthiness of sovereigns. A lower debt-to-GDP ratio tends to signal a greater ability by an economy to settle its obligations.

The Philippines’ GG debt level compares “favorably” to similarly rated economies, the Finance department added.

Citing data from the Organization for Economic Cooperation and Development, the agency said the country’s 36.3% ratio is better than Malaysia’s 52.7%, Brazil’s 57.2%, India’s 67.1%, and even against top-tier economies like the United Kingdom with 117.1% and the United States at 123.3%.