MANILA, Philippines - The general government debt rose in value as of the second quarter, but improved when accounting for the total size of the Philippine economy, data from the Department of Finance showed.
Total general government liabilities amounted to P4.7 trillion as of June, 4.1 percent up from P4.5 trillion in the same period last year.
While the nominal general government debt increased, its size as a proportion of gross domestic product (GDP) declined to 36.2 percent from 37.3 percent during the same period.
General government debt is a state-wide indicator of liabilities that includes not only that of the national government, but also of local government units.
Obligations by social security institutions such as the Social Security System and the Government Service Insurance System as well as the central bank, through its Board of Liquidators, are also included.
In a statement, Finance Secretary Cesar Purisima said the declining debt ratio showed how the Aquino administration "prioritized putting our fiscal house in order" even amid financial market volatility.
"Further narrowing reflects how we continue (to) run a tight ship - crucial especially on sailing through these uncertain times," he added.
A lower general government ratio shows that the state has more than enough resources to settle its liabilities in the future. Purisima said the ratio has "taken a downward trajectory" since 2010.
Finance data showed corroborated this: from 42.2 percent in 2010, the general government debt-to-GDP ratio consistently decreased to 41.4 percent in 2011, 40.6 percent in 2012, 39.2 percent in 2013 and 36.4 percent last year.
Quarterly data on the indicator was unavailable.
By nominal values, general government debt rose due to larger foreign liabilities by the national government. Data showed this segment went up by P193.2 billion amid "the impact of peso depreciation" that increased the value of foreign obligations.
This was partially offset by lower LGU debts, which dipped 3 percent to P67.5 billion as of June, data showed.
Cid Terosa, an economist at the University of Asia and the Pacific, said the declining share of debt to GDP should help make the Philippines attract more investments.
"(It) gives the impression that the Philippines is a business and investment haven worthy of more access to credit from international institutions," Terosa said in a text message.
He added that continued acceleration in GDP growth could trim the debt ratio further. In the first semester, GDP - the sum of all products and services created in an economy - grew by a faster 5.3 percent than the debt's 4.1 percent.
"If this happens, the Philippines will attract more investments and put itself among premier business and investment destinations in the world," Terosa said.