The ratio of government debt to gross domestic product (GDP) in the first quarter of 2013 eased to 48.9 percent, the Department of Finance said on Friday.
The finance department noted that the first-quarter figure was lower than the 51.5 percent posted at the end of 2012.
It added that December 2012 debt-to-GDP ratio also went down to 40.6 percent, or P4.288 trillion from the 2011 level of 41.4 percent, and the lowest since the metric was adopted in 1998.
“The debt ratio’s descent is driven by the national government purchasing more of its own debt as part of its proactive liability management agenda,” it stated.
In particular, the DOF noted that the tender-offer transaction in November 2012 bought back P22.3 billion of expensive foreign currency debt using the Bond Sinking Fund (BSF). It added that holdings of national government debt by the BSF expanded by 29.9 percent over the previous year.
“Also contributing to the ratio’s decline are the retirement of the remaining obligations of the old Central Bank and the increased holdings of government debt by the Social Security Institutions [SSIs],” it further said.
The DOF also mentioned that the Central Bank Board of Liquidators (CB-BOL) paid in full the last of its foreign obligations in January 2012. It also said that intra-sector debt holdings by SSIs rose from P409.6 billion to P453.7 billion from 2011 to 2012.
“The government remains committed to its proactive liability management agenda. The improvement in our debt statistics is the result of our policy of structural fiscal sustainability,” Finance Secretary Cesar Purisima said.
Meanwhile, the department also reported that the foreign component of consolidated general government debt also went down from 50.2 percent in 2011 to 44.1 percent in 2012, on the back of government efforts to reduce exposure to foreign currency risk.
It added that the foreign component of the national government debt also saw a drop as of the first quarter of 2013, from 18.6 percent of GDP at the end of 2012 to 17.4 percent of GDP at the end of March 2013. It explained that consolidated general government debt includes outstanding debt of the national government, the CB-BOL, SSIs, and local governments, and nets out intra-sector holdings of government securities including those held by the BSF.
It is the debt measure used by many debt watchers to assess the creditworthiness of sovereigns, it added.