PH's P16.75-T debt lower than Asian neighbors —DOF
The Department of Finance (DOF) on Thursday reiterated that the country's rising sovereign debt remains at a sustainable level, noting that it is lower compared to its peers in the region.
In a statement, the DOF said the national government's total outstanding debt of P16.75 trillion is 'relatively lower' than that of several countries in Asia.
Citing the latest available data, the Finance Department said Japan's total debt was P485.94 trillion, Singapore's was P53.68 trillion, South Korea's was P46.89 trillion, Indonesia's was P31.37 trillion, and Thailand's was P17.73 trillion.
Moreover, the DOF said it continues to manage the government's debt, bringing the debt-to-gross domestic product (GDP) ratio down below the post-pandemic internationally considered comfortable threshold of 70%.
The Finance Department said when the Marcos administration came in 2022, it inherited a P12.79-trillion debt stock.
Nearly half of it, or about P6.84 trillion, was due to efforts to boost state coffers for economic stimulus and response amid the COVID-19 pandemic.
It surpassed the combined debt pile acquired by previous administrations (President Ferdinand Marcos Sr.'s P365 billion, President Corazon Aquino's P372 billion, President Fidel Ramos' P681 billion, President Joseph Estrada's P766 billion, President Gloria Arroyo's P2.40 trillion, and President Benigno Aquino III's P1.37 trillion).
'Despite inheriting the larger debt stock, the Department of Finance has already made improvements to the country's debt statistics by reducing the debt-to-GDP ratio to 60.7% in 2024 via a prudent debt management strategy,' the agency said.
'With the economy continuing to grow faster—reaching about P36.8 trillion in 2028—compared to its obligations, the country remains firmly on track to reduce the debt-to-GDP ratio to below 60% by the end of the President's term,' it added.
As of the end of April this year, domestic debt continued to comprise the majority, or 69.2%, of the total debt stock, while external obligations accounted for 30.8%.
'Since a large chunk of the borrowing remains local, this means that the interest payments are being circulated back into the economy,' the DOF said.
The Finance Department said the Marcos administration is adopting an 80:20 borrowing mix strategy in favor of domestic sources to support the development of local capital markets and mitigate foreign exchange risks.
'Moreover, 91.5% of the government's borrowing consists of fixed interest rates, which shields the country from sudden increases in interest and exchange rates,' it said.
'On the other hand, 81.3% of the country's borrowings have long-term repayment periods, creating ample fiscal space for the government to allocate funds to grow the economy,' it added.
The DOF said that with intensified tax administration efforts, the government's tax collections continue to post double-digit increases, 'allowing the government to fund the President's priority programs and projects without imposing new taxes on the people and keeping debt growth well within sustainable levels.'
For the first four months of the year, tax collections grew by double digits to 11.49%, reaching P1.43 trillion.
The DOF expressed confidence that it would hit its collection targets for 2025.
In particular, the Bureau of Internal Revenue (BIR) collected P1.11 trillion as of end-April, up 14.50% year-on-year.
The Bureau of Customs (BOC), on the other hand, booked P306.1 billion in collections during the period, up 2.16% from a year ago.
The DOF said the country's fiscal deficit has also been steadily narrowing, dropping to 5.7% of GDP in 2024 —from the pandemic peak of 8.6% in 2021, 7.3% in 2022, and 6.2% in 2023.
'This is on track to decline to about 3.8% by 2028,' the Finance Department said.
'The government's strict adherence to fiscal discipline has earned it a recent credit rating upgrade of A- from Japan's Rating and Investment Information Inc. (R&I) and an outlook upgrade to positive from S&P Global,' it said.
The DOF said that securing a credit rating upgrade and affirmation signals high investor confidence in the Philippines' economic performance, increasing investor interest in Philippine bonds, and resulting in lower borrowing costs for the government.
'In return, these borrowings are reinvested into the economy through growth-enhancing investments, such as infrastructure, education, agriculture, health, and social services that produce more jobs for the Filipino people,' it said. —VBL, GMA Integrated News
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