Gov’t debt as share of GDP falls to 34.6%

GENERAL government (GG) debt as share of the economy continued to decline in end2016, even though the total rose in absolute terms, the Finance department said yesterday.

The Department of Finance reported that the general government debt-to-gross domestic product (GDP) ratio slid to 34.6% last year from 36.2% in 2015.

General government debt consolidates the outstanding debt of the national government (NG), local government units (LGUs), the Central Bank Board of Liquidators and social security institutions (SSIs), less those held by the Bond Sinking Fund (BSF).

According to the report, the lower debt share was the result of “careful cash and debt management as well as sturdy economic growth,” GDP expanded at an upwardly adjusted 6.9% in 2016.

In nominal terms, GG debt increased 3.87% to P5.016 trillion in 2016.

“The rise in the nominal GG debt was primarily due to the 3.8% increase in the consolidated NG debt (net of the BSF) to P5.456 trillion from the end2015 level of P5.256 trillion,” the report read.

“This was brought about by the net issuance of domestic securities ( gross borrowings less redemption); the year-onyear peso depreciation; as well as the decline in BSF holdings,” it added.

Finance Undersecretary and chief economist Gil S. Beltran said that the economy will continue to outgrow debt in the following years.

“As the debt ratio shows, GDP is rising faster than debt,” he said in a mobile phone reply.

Debt owed to domestic creditors was P2.933 trillion at the end of last year, representing 58% of the total. Foreign borrowing amounted to P2.084 trillion.

The national government intends to maintain an 80:20 financing mix, in favor of domestic lenders.

LGU debt increased 13% to P86 billion last year.

“The increase in borrowing was utilized for financing public services and economic enterprises,” it said.

“On the other hand, helping mitigate the increase in the nominal level of the GG Debt are the intrasector debt holdings which was listed at P526.0 billion as of end- 2016, up by 4.5% or P22.8 billion compared to the previous year’s level of P503.2 billion.”

Social security institutions raised their holdings of government securities by P19.5 billion while LGU loans held by the Municipal Development Fund Office rose by P3.4 billion. —