Debt-to-GDP ratio narrows to 45.4%

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THe ratio of national government debt to gross domestic product (GDP) narrowed to 45.4 percent in 2014 from 49.2 percent a year earlier, the Bureau of the Treasury (BTr) said.

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The bureau said the improvement in the debt ratio resulted from strong economic growth and a marginal increase in nominal debt as borrowings dropped amid a narrowing deficit.

The decline in the debt ratio was accompanied by improvements in the other debt metrics, showing the economy’s greater resilience to risks, it said.

For example, the government relied less on foreign borrowings, which shielded it from forex volatility. The amount of government-guaranteed debts also dropped substantially, it added.

The bureau also reported that the government’s outstanding debt climbed by 1 percent to P5.735 trillion in 2014 from the P5.681 trillion posted the previous year.

“The increase in the NG debt stock can be attributed to domestic debt issuances as external debt declined over the period,” it said.

On a monthly basis, debt expansion in December was up 0.3 percent or P18.943 billion from P5.716 trillion in November, official data shows.

The bureau said 66.6 percent of the total were local borrowings at P3.820 trillion, up 2.3 percent year-on-year and 0.8 percent from the end-November level of P3.789 trillion.

The foreign component of the outstanding government debt reached P1.914 trillion, down by 1.7 percent from the 2013 level of P1.947 trillion due to revaluation caused by adjustments in third currencies.

Compared with November’s level, external debt dropped P12.335 billion or 0.6 percent.
Consistent with the share of domestic debt, the bureau said the currency mix of government debt indicates a moderate exposure to unfavorable foreign exchange swings as peso-denominated obligations account for 68 percent of the total.

It was followed by 25 percent US dollar bonds and notes, 5 percent yen bonds, and 1 percent euro bonds.

Lastly, national government-guaranteed debt fell to P426.2 billion in 2014, 9.6 percent lower from the P470.8 billion for the previous year.

“The decline in guaranteed obligations is marked by similar drops in the levels of both domestic and external guaranteed debt which went down by P13.4 billion and P31.2 billion on a year-on-year basis, respectively,” the bureau said.

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