Gov’t outstanding debt up 5.5%

MANILA, Philippines - The government’s outstanding debt amounted to P5.675 trillion as of the end of November last year, up 5.48 percent from a year ago, the Bureau of Treasury reported yesterday.

The latest figure was also slightly up from the P5.65 trillion registered as of end-October 2013.

Government data showed that 65.9 percent or P3.74 billion of the outstanding debt was accounted for by peso-denominated liabilities. This was 9.68 percent higher from P3.41 billion a year ago as the government relied more on borrowings from the domestic market to help temper the steep appreciation of the peso against the dollar.

Domestic borrowings are done primarily through the issuance of government securities such as Treasury bills and bonds.

The balance of P1.93 trillion,  borrowed from external sources, was booked in foreign currencies such as the dollar, the euro and the yen.  This was down 2.03 percent year on year from P1.97 trillion.

Apart from loans extended by multilateral institutions and official aid from foreign governments, the Philippines also borrows overseas through the sale of bonds.

Among the country’s biggest providers of official development assistance are the World Bank, Asian Development Bank and Japan International Cooperation Agency.

The proportion of the outstanding debt to the country’s gross domestic product fell to 49.5 percent as of  end-June 2013 and was forecast to drop further to 49.22 percent by the end of December, the first time the ratio would settle below the 50 percent benchmark.

Based on international standards, the debt-to-GDP ratio should be 50 percent or less for it to be considered manageable.

A lower debt-to-GDP ratio means the country’s economy is growing faster than its debt and that the budget deficit is being contained.

The country’s economic managers aim to bring down debt to 40 percent by 2016 when President Aquino steps down from office.

Debt-to-GDP ratio is one of the indicators used by credit-rating agencies in assessing a country’s ability to service its obligations or its creditworthiness.