THE Philippines’s debt-to-gross domestic product (GDP) ratio soared to 63.5 percent in the first quarter, the highest in 17 years.
This is also above the internationally recommended 60-percent threshold by multilateral lenders for emerging markets like the Philippines, and also the highest since the country’s debt-to-GDP ratio hit 65.7 percent in 2005 under the Arroyo administration, based on the latest data released by the Bureau of the Treasury.
In 2021, the national government capped the year with a debt-to-GDP ratio of 60.4 percent.
As a share of the economy, domestic debt climbed to 44.4 percent by the end of the first quarter of this year from 42.1 percent as of end-2021.
Likewise, external debt rose to 19.1 percent as of end-March this year from 18.3 percent as of the end of last year.
As borrowings continued to pile up amid the Covid-19 pandemic to cover the cost of Covid-19 response and the drop in revenues amid the economic slowdown, outstanding debt of the national government has already reached a new record-high of 12.68 trillion as of end-March this year.
This was higher by P586.29 billion or 4.8 percent from P12.09 trillion as of end-February this year.
The Philippine Statistics Authority (PSA) reported on Monday that the economy grew by 8.3 percent in the first quarter of the year, higher than market expectations.
Economic managers said the strong economic performance in the first quarter “moves us closer” to hitting the government’s growth target of 7 to 9 percent this year.
By the end of this year, the government expects the country’s outstanding debt to further balloon to P13.42 trillion.
Finance Chief Economist Gil Beltran earlier told BusinessMirror that they expect the debt-to-GDP ratio to peak this year at 60.9 percent before tapering to 60.7 percent and 60.4 percent in 2023 and 2024, respectively.
Finance Secretary Carlos G. Dominguez III earlier said this year would be a “critical” time for the country as it needed to outgrow its debt by stimulating robust economic growth.
The finance chief has since said the next president should prioritize outgrowing the country’s debt at the soonest possible time to bring down the debt-to-GDP ratio.
To help the next administration bring down the debt and deficit levels that have risen amid the Covid-19 pandemic, Dominguez said the fiscal consolidation that they will be turning over to the next economic team is already “almost finished.”
Dominguez earlier said they will recommend a list of measures under the fiscal consolidation plan, including those that were not passed under the Duterte administration, such as the Passive Income and Financial Intermediary Taxation Act and the Real Property Valuation and Assessment Reform Act which were both under their Comprehensive Tax Reform Program.
Image credits: AP/Aaron Favila