Government debt burden eases in H1

MANILA, Philippines – The national government’s debt burden sustained its declining trend in the first semester, data from the Department of Finance showed.

From January to June, liabilities accounted for 43 percent of gross domestic product (GDP), down from 43.57 percent in the first three months and 44.7 percent by the end of last year.

“Debt management measures led to the continuing drop in the debt-to-GDP ratio,” Finance Undersecretary Gil Beltran said in a recent economic bulletin.

Governments usually measure their liabilities according to the size of their economies to determine their capacity to pay them and make them sustainable in the long run.

Since the Philippines is still in budget deficit, the government borrows from local and international investors to bridge this, which in turn, becomes debt.

A lower debt ratio is good since it means the economy is generating more resources than debt during a particular period.

Broken down, data showed domestic debt accounted for 28.8 percent of GDP, while their external counterparts cornered 14.2 percent as of the first half.

They were both down from 29.2 percent and 15.6 percent, respectively, by the end of last year.

As a result of lower debt metrics, less revenues were also channeled to pay for them.

From January to June, only 14.4 percent of total revenues were used to pay for debt interest, down from 14.7 percent as of end-December.