MANILA, Philippines — The share of the national government’s debt to gross domestic product rose to 48.1 percent in the first half as the economy plunged into a recession, the Department of Finance (DOF) said.
In his latest economic bulletin, Finance Undersecretary Gil Beltran said the debt-to-GDP ratio as of end-June 2020 rose to 48.1 percent from the record low of 39.6 percent by the end of 2019 and 43.4 percent as of the end of the first quarter.
Foreign debt as a share of GDP rose to 15.21 percent from 13.63 percent as of end-March, while domestic debt-to-GDP likewise increased to 32.86 percent from 29.74 percent.
Debt-to-GDP ratio is an indicator used by debt watchers and credit rating agencies to assess a country’s debt sustainability. A lower ratio indicates the government is generating more resources than debts, giving it more payment capacity.
The Philippine economy contracted by 16.5 percent in the second quarter, plunging the country into a recession.
In the first half, economic contraction averaged at nine percent.
On the other hand, the national government’s outstanding debt as of end-June also reached a new record high of P9.054 trillion, 1.8 percent up from the P8.89 trillion recorded the previous month.
This year, the government is planning to borrow P3 trillion from domestic and foreign lenders to finance the government’s coronavirus efforts. Another P3 trillion will be borrowed next year.
Meanwhile, Beltran said the country’s deficit as compared to the GDP climbed to 11.43 percent from 1.94 percent in the first quarter and 6.56 percent by end-2019.
Revenue effort declined to 16.63 percent from 17.15 percent in the first quarter, while expenditure effort rose to 28.06 percent from 19.09 percent.
Data from the Bureau of the Treasury (BTr) showed that the government incurred a fiscal deficit of P560.4 billion in the first six months of the year, 1,214 percent up from the P42.6 billion deficit recorded in the same period last year.
Revenues declined by 6.09 percent to P1.453 trillion from P1.55 trillion in the same period last year. This is, however, slightly higher than the revised target of P1.452 trillion.
On the other hand, BTr said government expenditures in the first semester grew by 26.63 percent to P2.01 trillion from P1.59 trillion in the same period in 2019. This, however, is 8.58 percent short of the target spending of P2.2 trillion.