Public sector debt down to P7.65T in 2013

MANILA, Philippines - The country’s debt burden declined further in 2013, supporting views that the Philippines has become more credit-worthy over the past few years due to efficient liability management strategies adopted by the Aquino administration.

The proportion of public debt to the country’s total economic output reached 66.3 percent, an improvement from the 70.9 percent recorded in 2012.

Public sector debt, a closely monitored indicator of a country’s creditworthiness, is an account of all the obligations incurred by the National Government, state-owned firms and local government units.

In absolute terms, the combined outstanding debt of various entities stood at P7.65 trillion.

The consolidated public sector debt comprises debt from general government sector, nonfinancial public corporations, and financial public corporations, deducting from this the debt holdings within these sectors.

As a percentage of GDP (gross domestic product), the total domestic component of the public sector debt fell by 2.2 percentage points from 49.4 percent in 2012 to 47.2 percent last year.

The foreign component likewise declined by 2.4 percentage points to 19.1 percent in 2013.

The debt mix slightly improved in favor of domestic debt, from 70:30 in 2012 to 71:29  a year ago. In particular, the foreign debt stock of the 14 monitored non-financial government corporations (MNFGCs) decreased by 1.9 percent year-on-year.

The 14 government owned and controlled corporations contributed 0.4 percent to the lowering of the debt stock as a percentage of the economy.

Contingent obligations, or debt guaranteed by the government, dropped to 4.1 percent from 4.8 percent the previous year.  The amount stood at P471 billion, representing a three percent decline year on year.

The general government’s debt relative to the size of the economy declined to 39.2 percent owing to a reasonable and manageable spending plan.

 “The Aquino administration continues to exercise prudence in its economic programs and policies. The improvement in our debt metrics and its effect on the stability of the economy and improved fiscal space are mainly caused by the administration’s proactive liability management agenda and corporate governance reforms. This healthy trend was a major component in the investment grade rating we got last year,” Treasurer Rosalia V. De Leon said.