Philippine debt-to-GDP ratio at 60.2%

The National Government’s (NG) debt as a share of the gross domestic product (GDP) stood at 60.2% as of the first quarter, the Bureau of the Treasury (BTr) said on Thursday.

This was below 61.1% a year ago but higher than 60.1% at the end of last year, it said in a statement.

This year, the government’s debt-to-GDP ratio target was set at 60.3%. It seeks to bring this down further to 55.9% by 2028.

The threshold considered by multilateral lenders to be manageable for developing economies is 60%.

As of end-March, the NG’s outstanding debt slid by 1.67% to PHP 14.93 trillion from the record-high PHP 15.18 trillion at end-February, mainly due to the net redemption of government securities.

The Treasury said the deficit-to-GDP ratio stood at 4.46% at end-March, from 4.82% a year ago and 6.2% at the end of 2023. It was also well below the 5.6% deficit ceiling set by the government this year.

The country’s budget deficit narrowed by 6.82% to PHP 195.9 billion in March from a year earlier. In the first quarter, the fiscal gap widened by 0.65% to PHP 272.6 billion.

The below-target debt and deficit ratios were due to the “continued recovery of the economy,” Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said in a Viber message.

He also cited improved tax collection, disciplined government spending and other fiscal reform measures.

“These tax and fiscal reform measures, alongside faster GDP growth that is among the fastest in Asia would help further reduce the NG debt-to-GDP ratio, which would help support the country’s favorable credit ratings,” he added.

The Philippine economy grew by 5.7% last quarter from 5.5% in the previous quarter and 6.4% a year ago. — Luisa Maria Jacinta C. Jocson