NATIONAL GOVERNMENT (NG) debt as a share of gross domestic product (GDP) fell to 60.2% at the end of the third quarter, the Bureau of the Treasury (BTr) reported.
This represents a decline from the 61% at the end of the second quarter and the 63.6% posted a year earlier.
The threshold considered by multilateral lenders to be manageable for developing economies is 60%.
“With the latest developments, the NG’s end of year debt ratio is likely to be lower than the 2023 Medium Term Fiscal Framework (MTFF) target of 61.4%,” the BTr said in a statement on Thursday.
“Moreover, the NG debt-to-GDP ratio is on pace to fall below 60% earlier than the 2025 MTFF commitment,” it added.
Outstanding debt totaled P14.27 trillion at the end of September. Year on year, the debt stock rose 5.6%.
The NG’s total debt service bill was equivalent to 8.6% of GDP in the third quarter. This was higher than the 5.8% posted a quarter earlier.
BTr Officer-in-Charge Sharon P. Almanza said in a Viber message to reporters that the improved debt-to-GDP ratio was due to a “combination of lower borrowing due to the lower deficit relative to program for the third quarter and higher GDP.”
The Philippine Statistics Authority (PSA) reported that the economy grew by a stronger-than-expected 5.9% in the third quarter.
In the second quarter, growth had been 4.3%, while the year-earlier reading was 7.7%.
In the nine months to September, GDP growth averaged 5.5%. The government is targeting 6-7% growth this year.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said that while the lower debt-to-GDP ratio is a welcome development, this may be due to the acceleration of economic growth, which “widened the denominator and effectively reduced the ratio at a faster rate.”
“A break below the 60% threshold is within striking distance soon, provided that the economy continues to grow at a relatively fast rate,” he said in a Viber message.
Meanwhile, the Department of Finance reported that the NG’s budget deficit as a share of GDP stood at 5.71% in the third quarter.
This was higher than the 4.77% posted in the second quarter but lower than the 6.45% reading a year earlier. During the first nine months, the NG’s budget deficit narrowed by 2.89% to P983.5 billion.
This year, the government has set a budget deficit ceiling of P1.499 trillion, equivalent to 6.1% of GDP. — Luisa Maria Jacinta C. Jocson