THE Philippines had the lowest gross external debt position last year among the Asean-5 countries, the Department of Finance (DOF) said.
Citing World Bank data, the DOF said in an economic bulletin that the country’s external debt as a share of gross national income (GNI) was at 20.11 percent as of end-2019. This is lower than Thailand’s 34.07 percent, Indonesia’s 36.85 percent, and Malaysia’s 64.59 percent. Vietnam did not have available data for 2019, but recorded a 47.86-percent external debt ratio in 2018.
Nonetheless, it was only the Philippines that registered a year-on-year increase among the Southeast Asian countries with complete data for both 2018 and 2019.
In 2018, the Philippines’s external debt as a share of GNI was at 19.98 percent.
“In the case of the Philippines, the relatively low external debt-to-GNI ratios attest to the government’s policy of sustaining its prudent borrowing activities,” said Finance Undersecretary and Chief Economist Gil Beltran. “While the realities brought about by the health crisis have significantly changed the global economic and financial landscape, the government is steadfast in pursuing various reforms to raise much-needed revenues to stimulate the economy and at the same time enhance the fiscal space.”
As a percentage of Exports of Goods and Services and Primary Income, the country’s external debt also fell to 54.4 percent in the first quarter this year from 54.8 percent in the same period last year, according to DOF.
“The decline is due primarily to public sector debt which dropped from $40.13 billion to $38.3 billion. Compared with two decades ago, when the country was recovering from the Asian financial crisis, the external debt ratio in 2020 was significantly lower at 51.2 percent of the debt-exports ratio in 2000,” Beltran said.
The country’s debt situation, he added, is “crucial” at a time when countries scramble for funds to fuel economic recovery in the face of a slowing global economy and dampening of investment activities resulting from the Covid-19 pandemic.
“While uncertainties abound, debt metrics are among the important indicators being watched by both domestic and international investors, along with credit rating agencies,” he said.
As the government ramps up its borrowings to cover the budget deficit from increased spending amid revenue decline, the national government expects its outstanding debt to reach P10.16 trillion this year, up by 31.42 percent from last year’s amount.
The government also sees the country’s debt-to-GDP ratio this year rising to 53.91 percent of GDP—a level it has not seen in over a decade—from a record low of 39.6 percent of GDP last year.