The ratio of general government debt to the country’s gross domestic product (GDP) dropped slightly in the first semester of 2016 as the Philippine economy grew faster than the increase in its obligations, the Department of Finance (DOF) said on Sunday.
DOF data released Sunday showed the general government debt-to-GDP improved to 35.4 percent as of end-June from 36.1 percent a year earlier and from 35.8 percent as of end-March.
The general government debt-to-GDP measures the amount of a country’s gross government debt as a percentage of its GDP. It is an indicator used by credit rating agencies such as Fitch Ratings, Moody’s Investors Service and S&P Global Ratings to assess the creditworthiness of sovereigns.
In absolute terms, general government increased by 4.3 percent to P4.88 trillion as of end-June 2016 from P4.68 trillion a year earlier.
However, the growth registered by general government debt was offset by the higher GDP growth in the first six months of the year. The GDP grew by 6.9 percent in January to June from 5.5 percent a year earlier.
The general government debt-to-GDP ratio is an indicator used by credit rating agencies to assess the creditworthiness of sovereigns.
At P2.836 trillion, domestic borrowing made up nearly two-thirds of the total general government debt, while overseas creditors accounted for P2.052 trillion.
General government debt consists of the outstanding obligations of the national government, the Central Bank Board of Liquidators, social security institutions and the local governments minus the amount allotted to the Bond Sinking Fund (BSF) as cover for maturing bond obligations.
The same DOF data traced the increase in nominal general government debt to a 2.3 percent rise in outstanding debt held by the national government from P5.816 trillion to P5.948 trillion.
The national government debt net of the BSF allotment totaled P5.299 trillion, up 3.7 percent from P5.110 trillion. The total increase of P188.9 billion consisted of P33 billion for domestic borrowings, while P155.9 billion was allocated to foreign obligations that included debt issurance and foreign exchange cover.
Local government debt rose by 10.6 percent to P74.7 billion from P67.5 billion. Intrasector debt totaled P485.1 billion, down 1.1 percent.