Phl outstanding debt hits P5.68T as of Dec

MANILA, Philippines - The country’s outstanding debt reached P5.68 trillion as of end-December last year, up 4.5 percent from a year ago due to higher domestic obligations.

In a report, the Bureau of Treasury said the bulk or P3.73 trillion of the total outstanding debt was secured from the domestic market. The amount represented an increase of 7.6 percent equivalent to P265 billion as the government continued to step up domestic borrowings to manage foreign exchange risk and develop the capital market while taking advantage of ample domestic liquidity.

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

The balance of P1.95 trillion was sourced from foreign creditors, booked in foreign currencies such as the dollar, euro and yen. The figure was 1.1 percent or P21 billion higher than the previous year’s 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 49.2 percent last year from 51.5 percent in 2012 due to the government’s proactive liability management efforts, finance officials said. This was the first time the ratio settled below the 50 percent benchmark.

External and domestic debt both dropped to 16.9 percent and 32.3 percent of GDP from previous levels of 18.6 percent and 32.8 percent, respectively.   “These developments highlight greater resiliency and sustainability in the trajectory of NG debt,”the BTr said.

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.