Phl in better shape than 20 years ago – Purisima

Finance Secretary Cesar Purisima branded as “misguided” a non-government organization’s claim of ballooning debt under the Aquino administration, saying the country is in a “much better” footing now than in nearly two decades.

“By virtually any sensible measure-that is to say, on indicators that matter-- we are much better off today than we were six, or even 18 years ago...,” Purisima said in a statement over the weekend.

The finance chief’s statement was in response to claims made by the Freedom from Debt Coalition that President Aquino would leave the government with P6.4 trillion in debts, P4.16 trillion of which were borrowed under his term.

According to data from the Bureau of the Treasury, the National Government debt reached P5.95 trillion last year.

But Purisima said there are other better measures of debt “sustainability” than absolute values of liabilities, which almost all nations in the world incur to finance budget programs and projects.

“Using nominal figures to talk about debt is as misguided as it is disingenuously detrimental to the quality of public discourse on public finance,” he said.

“It is important to understand that the concept of ‘debt’ for an individual person is vastly different for those of governments or corporations,” Purisima explained.

“Governments and private corporations alike maintain a healthy level of debt, not only to help develop capital markets, but to finance future growth,” he said.

A key measure will be to compare debt with how the economy generates resources through growth in gross domestic product (GDP) to keep obligations manageable.

Using NG debt, the so-called debt-to-GDP ratio stood at 44.8 percent last year, down from 54.9 percent in 2009 and was the lowest since 1996.

The figure further improves when liabilities by social security institutions such as the Social Security System and Philippine Health Insurance Corp. are included. The ratio of general government debt declined to 36.4 percent in 2014, the lowest since 1998.

Considering obligations by state corporations, the broadest public sector debt was down to 55.8 percent as of September last year, also the lowest in 17 years.

“Both the private and public sectors fund operations in two ways: revenues earned or through borrowings...,” Purisima said.

Without debt, Purisima said the government would be forced to either cut back on spending on vital programs or increase taxes to ensure enough money. “Neither is an option for the Philippines,” he said.