General Government debt improves to 39.2% of GDP as of end-2013

MANILA, July 25 (PNA) — Philippine debt metrics continued to improve as an effect of the Aquino administration’s proactive liability management agenda. As of end-2013, the country’s general government (GG) debt to GDP ratio improved by 1.4 percentage points (ppt) from the previous year and 0.5 pptfrom the previous quarter to reach 39.2 percent.

International debt watchers use the GG debt ratio as one of the metrics used to determine a sovereign’s credit worthiness.

In end-2009, prior to the Aquino administration, GG debt was at 44.9 percent of GDP, which marks an improvement of 5.7 ppt over the course of the administration.

The improvement in this ratio was driven mainly by the 2.3-ppt year-on-year improvement in the national government debt to GDP. The bond sinking fund (BSF) balance declined by 2.2 percent year-on-year to P748 billion.

“The Aquino administration continues to exercise prudence in its economic programs and policies. The improvement in our debt metrics and its effect on the stability of the economy and improved fiscal space are mainly caused by the administration’s proactive liability management agenda and corporate governance reforms. This healthy trend was a major component in the investment grade rating we got last year,” said Treasurer Rosalia V. De Leon.

The country’s debt stock also continued on its healthy downward trend.

As of December 2013, the country’s Outstanding Public Sector Debt (OPSD) was recorded at P7.65 trillion, or 66.3 percent of the country’s gross domestic product (GDP).

The ratio decreased by 4.6 percentage points (ppt) from 70.9 percent, which was recorded during the same period in 2012.

The consolidated public sector debt comprises debt from general government sector, non-financial public corporations, and financial public corporations, deducting from this the debt holdings within these sectors.

As a percentage of GDP, the total domestic component of the public sector debt decreased by 2.2 ppt, from 49.4 percent in 2012 to 47.2 percent in 2013.

The foreign component, meanwhile, decreased by 2.4 ppt, from 21.5 percent of GDP in 2012 to 19.1 percent in 2013.

The debt mix slightly improved in favor of domestic debt, from 70:30 in 2012 to 71:29 in 2013.

In particular, the foreign debt stock of the 14 monitored non-financial government corporations (MNFGCs) decreased by 1.9 percent year-on-year.

The 14 government owned and controlled corporations (GOCCs) contributed 0.4 ppt to the lowering of the debt stock as a percentage of the economy.

Contingent obligations, or debt guaranteed by the national government, notably declined from 4.8 percent of GDP in 2012 to 4.1 percent in 2013. The amount stands at P471 billion, registering a 6.3 percent decrease year on year. (PNA)