CPSD hits P7.7 T in March

MANILA, Philippines - The Philippines’ consolidated public sector deficit (CPSD)  stood at  P7.7 trillion as of March this year, up two percent from the end-2012 level.

The CPSD – indicator of a country’s creditworthiness – is the amount by which a government spends more than it receives in a specific period of time.

CPSD refers to the combined budget deficits of the government, government owned and controlled corporations, government-owned banks and financial institutions, social security institutions, the central bank and local government units.

According to the DOF, the latest CPSD was equivalent to  71.3 percent of the country’s gross domestic product (GDP), lower than the 74.3 percent recorded in the first quarter  last year.

As of the end of the first quarter,  72 percent of the total outstanding public sector came from domestic lenders while 28 percent was sourced from foreign creditors.

Total domestic debt of the public sector rose 5.3 percent to P5.5 trillion while foreign debt declined  by 5.4 percent to P2.1 trillion.

The non-financial public sector fell 2.7 percent to P5.4 trillion, equivalent to 50.4 percent of GDP. This was due to the P155.6 billion decrease in the government’s debt, lower debt of LGUs as well as the decline in both the domestic and foreign liabilities of the 14 monitored government-owned and controlled corporations.

The outstanding debt of the financial public corporations went up by 5.4 percent to P3.9 trillion.  The central bank debt increased by  6.7 percent.

DOF Undersecretary and chief economist Gil Beltran said the ratio of general government debt to GDP declined to 38.5 percent from 40.6 percent as of the end of 2012 as a result of the government’s  intelligent borrowing program.

“The benefits of our liability management program have allowed us to notch general government debt at only 38.9 percent of GDP. We already scored more favorably on this metric than many other economies rated higher than us and we were able to drive this down further,” Beltran said.

“In fact, our general government ratio is now lower than the ASEAN+3 average of 39.4 percent,” he added.

The improving fiscal situation of the country and the the entire public sector was the key to Philippines’ upgrade  of credit rating to investment grade status from the three major credit rating agencies – Fitch Ratings, Standard and Poors’, and most recently by Moody’s Investors Service.

The Aquino Administration expects the CPSD to reach P83.5 billion by the end of the year, significantly down from P163.3 billion a year ago, mainly driven by improvements in the collection of national and local taxes and of the financial performance of state-owned firms.