• 2013 Public sector debt-to-GDP ratio dips to 66.3%

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    The Philippines’ outstanding public sector debt (OPSD) as of the fourth quarter of 2013 stood at 66.3 percent of the economy as measured by gross domestic product (GDP), at P7.65 trillion.

    That reflects an improvement from the 70.9 percent ratio of public sector debt to GDP in 2012, data released by the Department of Finance (DOF) on Friday showed.

    The total domestic component of the public sector debt as a percentage of GDP dropped by 2.2 percentage points to 47.2 percent in 2013 from 49.4 percent in 2012. The foreign component fell 2.4 percentage points to 19.1 percent from 21.5 percent.

    The Finance department said the Philippine debt metrics continued to improve as an effect of the government’s proactive liability management agenda.

    It noted that as of end-2013, the country’s general government debt-to-GDP (GG) ratio improved by 1.4 percentage points from the previous year and 0.5 percentage points from the previous quarter to reach 39.2 percent.

    “International debt watchers use the GG debt ratio as one of the metrics to determine a sovereign’s creditworthiness. At end-2009, prior to the Aquino administration, GG debt was at 44.9 percent of GDP, which marks an improvement of 5.7 percentage points over the course of the administration,” the DOF stated.

    The Finance agency said the improvement in this ratio was driven mainly by the 2.3- percentage point year-on-year improvement in the national government debt to GDP.

    The bond sinking fund (BSF) balance declined by 2.2 percent year-on-year to P748 billion, it added.

    National Treasurer Rosalia de Leon said the government continues to exercise prudence in its economic programs and policies.

    “The improvement in our debt metrics and its effect on the stability of the economy and improved fiscal space are mainly caused by the administration’s proactive liability management agenda and corporate governance reforms,” she said.

    De Leon also noted that this healthy trend in the country’s debt metric was a major component in the investment grade ratings awarded to the Philippines last year.

    Meanwhile, the Finance agency said the country’s debt stock also continued on its healthy downward trend as the debt mix slightly improved in favor of domestic debt, from 70:30 in 2012 to 71:29 in 2013.

    In particular, it said the foreign debt stock of the 14 monitored non-financial government corporations decreased by 1.9 percent year-on-year, while 14 government owned and controlled corporations contributed 0.4 percentage points to the lowering of the debt stock as a percentage of the economy.

    Contingent obligations, or debt guaranteed by the national government, notably declined from 4.8 percent of GDP in 2012 to 4.1 percent in 2013. The amount stands at P471 billion, registering a 6.3 percent decrease year on year, it added.

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