Gov’t debt hits P10.77 trillion

An economist expects government debt to remain sustainable even after it registered another debt uptick in March this year given the need to mainly finance pandemic and economic recovery-related programs, according to a report by Philippine News Agency.

Data released by the Bureau of the Treasury on Monday showed that total outstanding government liabilities reached P10.773 trillion as of end-March this year, up from year-ago’s P8.177 trillion.

“The increase in the government’s debt would still remain sustainable in the coming years for as long as the debt-to-GDP (gross domestic product) ratio remains around 60 percent, which is considered an important international threshold,” Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort said in a report.

Ricafort said the ratios of the government’s debt-to-GDP and budget deficit-to-GDP have been lower compared to some countries in the Association of Southeast Asian Nations (Asean) because of fiscal discipline. 

As of 2020, the deficit-to-GDP ratio stood at 7.6 percent while debt-to-GDP was at 54.5 percent, with the latter up from the previous year’s 39.6 percent due to the pandemic. 

“Cautious approach on any additional stimulus measures just like in 2020 would help limit any further widening of the budget deficit and also temper any further rise in the debt-to-GDP ratio,” he said.

Ricafort said since the government’s debt-to-GDP ratio remains below the acceptable international threshold, it provides the government “greater leeway to increase spending, budget deficits, and overall debt to pump-prime the economy.”

He said both the budget gap and debt-to-GDP ratio are expected to rise further in the coming months given the need to address the pandemic.

However, the reopening of the economy and continuation of robust gross international reserves (GIR), which as of end-March 2021 stood at USD104.48 billion and was equivalent to 12 months’ worth of imports, among others, were expected to help the government manage foreign debt, he added.