Leverage among lowest in Asia

Compared with those of its Asian peers, external debt ratios of the Philippines are lower in 2018, the latest data from the World Bank showed

Despite a government plan to raise foreign borrowings, the country’s overall external debt remains prudent, latest economic bulletin from the Department of Finance (DoF) showed.

“The country’s external debt dropped to 19.67 percent of gross national income (GNI) as of the end-first quarter of 2020 from 20.98 percent in the same period in 2019,” the DoF said.

“As a percent of goods and services and primary income, it also dropped to 54.4 percent from 54.8 percent,” it added.

According to the agency, such decline could be attributed largely to the significant drop in public sector debt with $38.3 billion in the first quarter 2020 compared to the $40.13 billion in the same quarter a year-ago.

Debt ratio low

“Compared with two decades ago when the country was recovering from the Asian financial crisis, external debt ratios in 2020 were 41.4 percent of the debt-GNI ratio and 51.2 percent of the debt-exports ratio in 2000,” the DoF explained.

“Compared with those of its Asian peers, external debt ratios of the Philippines are lower in 2018, the latest data from the World Bank showed,” it added.

Still, the country’s external debt as a percentage of the GNI was significantly lower at 19.9 percent versus the Asian average of 33.6 percent. This also ranks the Philippines as third among the countries with the lowest debt ratios across the region.

Prudent policy

The DoF then stressed that these figures reflect the government’s prudent debt policy, which enabled the country to be in a stronger position to battle the pandemic.

Likewise, the agency said that this prudent debt management was among the reasons for investors’ confidence towards the Philippines.

To recall, the country was recognized by the international community, being ranked as seventh among 80 countries as the best to invest in after the pandemic and placed sixth out of 66 emerging economies in terms of fiscal strength.

PHOTOGRAPH COURTESY OF DOE Best bet are Viets The government will learn a lot from Vietnam in terms of containing the coronavirus disease as the country remains among the few that was spared of the outbreak. Department of Energy Secretary Alfonso Cusi receives the newly-designated Ambassador of the Socialist Republic of Vietnam to the Philippines, His Excellency Hoang Huy Chung (third from left), and his delegation yesterday at the Department of Energy headquarters in Taguig City. The Vietnamese Ambassador “virtually” presented his credentials to President Rodrigo R. Duterte last month.