Debt-to-GDP ratio drops

MANILA, Philippines — The share of the national government’s obligations to gross domestic product declined in the third quarter of 2017, as economic expansion outpaced the increase in debt, according to data from the Department of Finance (DOF).

In his latest economic bulletin, Finance Undersecretary Gil Beltran said the country’s debt-to-GDP ratio declined to 41.7 percent in the third-quarter from 43 percent in the same quarter last year.

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.

Last Thursday, the Philippine Statistics Authority reported the country’s gross domestic product grew 6.9 percent in the third quarter, bringing the year-to-date average growth rate to 6.7 percent.

On the other hand, the government’s outstanding debt reached P6.44 trillion as of the end of September, 5.8 percent higher than the P6.09 trillion recorded in the same period in 2016.

National Treasurer Rosalia de Leon earlier said the government’s debt-to-GDP ratio is expected to hit a new record low of 40.76 percent by end-2017.

Over the medium term, debt-to-GDP is projected to decline to 36.7 percent.

Meanwhile, Beltran’s economic bulletin also showed the share of the government’s revenues to the GDP rose slightly to 15 percent from 14.1 percent.

Expenditures-to GDP ratio, meanwhile, slightly slowed down to 18 percent from 18.3 percent.

The government borrows from the local and foreign creditors to finance its budget deficit and pay maturing debt. Economic managers assured the country would be sustaining an 80:20 mix of borrowings, in favor of domestic sources.

They also vowed to practice fiscal prudence and responsibility in investing and borrowing amid the administration’s massive infrastructure program.