THE Department of Finance (DoF) said the Philippines is well-positioned with low levels of foreign debt load during the pandemic, which compares favorably with its standing during the Asian financial crisis, during which the debt load was more than double current levels.
According to a DoF economic bulletin, Philippine external debt in the first quarter declined to 19.67% of gross national income (GNI) from 20.98% a year earlier, among the lowest debt loads in Asia.
GNI is gross domestic product plus the net factor income from overseas.
In a statement Wednesday, Undersecretary and DoF Chief Economist Gil S. Beltran said the debt metrics are much lower than they were in the aftermath of the 1997 Asian financial crisis.
“Compared with two decades ago when the country was recovering from the Asian financial crisis, external debt ratios in 2020 were 41.4% of the (2000 level)” while the debt-exports ratio was 51.2% of the debt-exports ratio in 2000,” Mr. Beltran said in the statement.
“The Philippines’ prudent debt policy has enabled the country to strengthen its defenses against external shocks like the COVID-19 (coronavirus disease 2019) pandemic. This is one of the reasons for the strong confidence of investors in the Philippine economy,” he added.
External debt as a share of GNI has been steadily declining from 47.47% in 2000 to 23.3% in 2017, 19.9% in 2018 and 19.41% in 2019.
In absolute terms, external debt has been rising to about $83.618 billion in 2019 compared with $52.06 billion in 2000, but against a larger economy.
As a percentage of goods and services and primary income, external debt fell to 54.37% in the first quarter from 54.8% a year earlier. The corresponding ratios were 53.88% in 2019, 53.9% in 2018, and 106.1% in 2000.
“The decline is due primarily to public sector debt which dropped from $40.13 billion to $38.3 billion (in the first quarter),” Mr. Beltran said.
Public sector foreign debt rose to $36.05 billion in 2019 from $33.37 billion in 2018 and $34.13 billion in 2000.
Private sector debt in the first quarter rose to $43.12 billion from $40.3 billion a year earlier. — Beatrice M. Laforga