Philippine debt metrics improve in Q1

MANILA, Philippines - The country’s debt metrics continued to fall in the first quarter as foreign borrowings declined further, data from the Department of Finance showed yesterday.

The DOF said the improvement in debt metrics and a lower reliance on foreign debt has created a “sustainable fiscal environment” for the Philippines.

National government debt as a percentage of gross domestic product (GDP) declined to 45.2 percent in the first quarter from 45.4 percent in end-2014 and 49.2 percent in 2013.

Meanwhile, the general government debt to GDP ratio also slid to 36.3 percent in the first three months of the year from 36.4 percent in 2014 and 39.2 percent in 2013.

The government also trimmed its foreign debt to GDP ratio to 15.1 percent in end-March from 15.2 percent in end-2014 and 16.9 percent in 2013.

“Proactive debt management has decreased the debt burden on expenditures, creating more fiscal space to fund social commitments,” the DOF said.

The country’s improving public finances, particularly the reduction in its debt burden, has been one of the reasons it has been awarded an investment-grade credit rating by Fitch Ratings, Moody’s Investors Service, and Standard and Poor’s, the DOF said.

Latest data showed outstanding government went up three percent to P5.82 trillion in June from P5.65 trillion in the same month last year.

Domestic borrowings during the month climbed three percent to P3.84 trillion, while loans from external sources increased three percent to P1.98 trillion.

The Department of Budget and Management said last month the government will be further slashing borrowings to P674.8 billion next year from the programmed P710.8 billion this year.

This means debt servicing will only amount to 14 percent of GDP in 2016.

The government also plans to rely heavily on domestic loans next year as 85 percent of the borrowings will be sourced locally, while the remaining 15 percent will be obtained from foreign sources.