Debt-to-GDP ratio eases in H1

MANILA, Philippines - One of the widest measures of government debt declined for a second quarter in a row in June, the Department of Finance (DOF) reported over the weekend. 

The share of general government debt to gross domestic product (GDP) stood at 35.4 percent in the first semester, down from 35.8 percent in the first quarter and 36.3 percent by the end of 2015.

The figure was also down from 36.1 percent in the same period a year ago, data showed.

General government debt is the second widest measure of state liabilities that does not only include national government obligations, but also that of local government units, social security institutions and central bank Board of Liquidators.

Social security agencies pertain to the likes of Social Security System and Philippine Health Insurance Corp., while the central bank board handles old obligations by the old monetary authority.

A lower ratio indicates the government has more economic resources than liabilities, reflecting its capacity to settle debts.

“The government debt-to-GDP ratio is an indicator used by debt watchers, such as Fitch Ratings, Moody’s Investors Service and S&P Global Ratings, to assess the creditworthiness of sovereigns,” DOF said in a statement.

“The Philippine government has already secured investment grade sovereign credit ratings from all three major international credit rating agencies Fitch, Moody’s and S&P,” it added.

In absolute values, general government debt rose 4.3 percent to P4.89 trillion as of the first half, data showed.

The increase, however, was slower than the 6.9-percent GDP growth posted during the same period. 

According to figures, the increase was led by a rise in LGU debts by more than a tenth to P74.7 billion.

These were slightly offset by a 1.1-percent decline in intrasector debt holdings to P485.1 billion.

Meanwhile, separate Treasury data showed the NG settled less debts in July under the new administration.

Specifically, it paid P61.05 billion in liabilities, down 8.29 percent from the previous year. The bulk of the amount was used to pay interest than the principal amount.

From January to July, debt payments amounted to P353.78 billion, down by a tenth from P393.5 billion a year ago.