MANILA, Philippines – The ratio of the general government debt to the country’s gross domestic product (GDP) stood at 38.1% as of end-March 2014, lower than its year ago level of 38.5%, data from the Department of Finance (DOF) showed.
The general government debt amounted P4.49 trillion ($100.9 billion*) or 38.1% of the GDP, the DOF said on Tuesday, September 23.
The GG debt went down due to the strong GDP performance and slower debt accumulation for the second and fourth quarters of 2013, as part of the government’s priorities on proactive liability management.
The debt-to-GDP ratio is one of the indicators that credit rating agencies look at when evaluating the country’s credit worthiness. A low debt-to-GDP ratio shows the country is producing enough and unlikely to default on its debts.
“We will continue to bring down government debt as part of our efforts to minimize government risk and liabilities,” National Treasurer Rosalia de Leon said.
“As our economy continues to grow, we want to ensure that we do so on sound and strong fiscal foundations,” De Leon added.
The foreign component of the consolidated general government debt decreased from 43.39% to 42.06% during the same period behind government efforts to reduce exposure to foreign currency risk.
As a result, the domestic component rose slightly, from 56.61% to 57.94% in the first quarter.
Meanwhile, the combined investment in government securities of the Government Service Insurance System and the Social Security System rose from P474.6 billion ($10.66 billion) to P481 billion ($10.82 billion) between 2013 and the first quarter of 2014.
The Aquino administration is aiming to cut the debt-to-government ratio to below 45% by 2016.
The general government debt to GDP ratio was at 44.3% in 2009, prior to the Aquino administration.
This marks an improvement of 6.2 percentage points over the course of the administration, the DOF said. – Rappler.com
($1 = P44.46)