The national government’s debt to gross domestic product (GDP) proportion went up to 56.2 percent as of end-March this year from the 55.2 percent obligation to-GDP proportion in a similar period in 2017.

In the economic bulletin released by the Department of Finance (DOF) Wednesday, it said the country has advanced its borrowing ahead of the projected triple adjustments in the policy rate of the United States Federal Reserve System.

“The Treasury issued PHP255.4 billion in Treasury bonds in December 2017 at 4.625 percent to take advantage of favorable rates,” the DOF said. It added that this drove the domestic debt to increase to 36.5 percent of GDP as of end-March 2018 from 35.4-percent level during the same period in 2017.

From the 4.625-percent yield on T-bonds in December last year, the average interest rate for the government security climbed to 6.350 percent during the latest T-bonds auction Tuesday, May 22.

Government Savings

The government’s external borrowings slightly declined to 19.7 percent in the same period this year from 19.8 percent in the previous year. According to DOF, “The excellent design and timing of borrowings have allowed the government to tap cheaper rates and longer maturities with higher volumes, enabling government to optimize savings for the ‘Build, Build, Build’ Program and social expenditures”.

Moreover, the debt-to-revenue ratio as of end-March declined to 268.6 percent this year from 273.9 percent in 2017, while debt-to-expenditure ratio fell to 240.5 percent in 2018 from 230 percent last year.

The government has maintained the 0.66 percent interest payments-to-GDP ratio over the 12-month period, while interest payments-to-revenue and interest payments-to expenditure ratios both decreased to 4.19 percent and 3.59 percent, respectively, as of end-March 2018. While the net debt-to-GDP ratio declined from 40.1 percent to 39.6 percent as of end-March 2018  as of end-March last year.

DOF added, “Proactive debt management has afforded the Philippines an expanded fiscal space as the level of debt has declined significantly from 87.2 percent in 2006 to 42.1 percent in 2017 — a 45.1 percentage point decline. Net debt shows a bigger decline from 84.8 percent to 39 percent –a 45.8 percentage point decline”.

Source PNA