MANILA – Higher financing requirements brought about by the pandemic increased the national government’s liabilities but an economist believes that as long as credit level is kept within the international threshold then debt remains sustainable.
The Bureau of the Treasury (BTr) on Thursday reported the rise in the national government’s (NG) total outstanding debt to PHP10.99 trillion as of end-April 2021, up by PHP217.49 billion from the previous month’s level.
“The increase in the government’s debt would still remain sustainable in the coming years for as long as the debt-to-GDP ratio remains around 60 percent, which is considered an important international threshold,” Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort said in a report.
As of end-2020, NG’s total outstanding debt amounted to PHP9.795 trillion.
Last year, the proportion of debt to the country’s total output, or the debt-to-gross domestic product (GDP) ratio, rose to 54.5 percent from 39.6 percent in the previous year, which authorities attribute to the increased need to tap fund sources to financing pandemic-related programs.
Ricafort said the country’s debt-to-GDP remains relatively lower compared to some countries in the region due to the government’s fiscal discipline.
“Cautious approach on any additional stimulus measures, just like in 2020, would help limit any further widening of the budget deficit and also temper any further rise in the debt-to-GDP ratio,” he said.
As of last April, the government’s budget gap reached PHP365.9 billion, 1.63 percent higher than the PHP360 billion deficit same period in 2020.
Economic managers have set a budget gap ceiling of 9.4 percent of GDP this year.
“The country’s debt-to-GDP ratio still expected to be within/around the international acceptable threshold of 60 percent of GDP, especially if GDP continues to recover in the coming months/years, thereby giving the government greater leeway to increase spending, budget deficits, and overall debt to pump-prime the economy,” Ricafort added. (PNA)