Press "Enter" to skip to content

DOF: PH Debt Remains Manageable

Shares

Key Points

  • Chief Economic Manager of President Duterte said the debt level in the Philippines remained manageable.
  • Referring to the $300-million policy support for the inclusive financing development program (subprogram 2) supported by the Asian Development Bank (ADB) in Manila last Friday, Finance Secretary Carlos G. Dominguez III said that “even with this loan, our debt position will remain strong and sustainable.”
  • The debt-to-gross domestic product (GDP) ratio rose to 48.1 percent as of June from 43.4 percent in March and 39.6 percent in 2019, as the economy plunged into recession during the first half while government borrowings soared.
  • Visit The Financial Today’s homepage for more stories.

Manila • Despite a string of loans recently obtained by the government—and more upcoming borrowings in the pipeline—to fund the response to COVID-19 and economic recovery from the pandemic-induced recession, Chief Economic Manager of President Duterte said the debt level in the Philippines remained manageable.

Referring to the $300-million policy support for the inclusive financing development program (subprogram 2) supported by the Asian Development Bank (ADB) in Manila last Friday, Finance Secretary Carlos G. Dominguez III said that “even with this loan, our debt position will remain strong and sustainable.”

The debt-to-gross domestic product (GDP) ratio rose to 48.1 percent as of June from 43.4 percent in March and 39.6 percent in 2019, as the economy plunged into recession during the first half while government borrowings soared.

The outstanding debt of the national government reached a new record high of P9.05 trillion in June, while GDP contracted an average of 9 percent in the first two quarters.

Since the government will borrow P3 trillion each year and in 2021 to better address the health and socioeconomic crises inflicted by the COVID-19 pandemic, the debt-to-GDP ratio of the Philippines was projected to rise further to 53.9 percent by the end of the year and 58.3 percent by 2021.

The last time the Philippines had over 50 percent debt-to-GDP was 50.2 percent in 2010.

If achieved, the forecasted debt-to-GDP ratios in 2020 and 2021 will be the highest since the recorded 58.8 percent in 2006.

However, Dominguez pointed out that the loans being secured, such as the ADB’s lending for the Philippines’ national strategy for financial inclusion, were public investments whose “returns will accrue to millions of working Filipino families and small businesses who are currently excluded from the financial system” and boost efforts to rebuild the economy.

“Financial inclusion is a pillar of the Duterte administration’s socioeconomic agenda. The approval of the ADB’s inclusive finance development program, subprogram 2, will help the government reach its financial inclusion targets. Filipino families will be less vulnerable to onerous lending practices and government subsidies can reach beneficiaries faster and more efficiently,” Dominguez said.

This ADB facility will facilitate the accelerated rollout of the national identification system, allowing more Filipinos to open bank accounts and speed up social assistance program delivery. The loan will also support the strengthening of value chains in agriculture, financial literacy in basic education, digital payments, and Islamic banking.

“The ADB program will support our country’s efforts to digitalize our banking and payments system. COVID-19 has underscored how important digital systems and contactless transactions are for economic resilience,” Dominguez added.

Earlier this month, the ADB extended the $400-million policy loan to the Philippines for the competitive and inclusive agriculture development program (subprogram 1), while it was also expected to authorize the $125-million health systems enhancement to address and limit (HEAL) COVID-19 loan before the end of the month.

The ADB had planned for 2020 to lend a record $4.2 billion to the Philippines, the bulk of which will be spent on boosting the war against COVID-19.

Be First to Comment

Leave a Reply

Hi, I'm Alfred Cardenas!We’re running an equity crowdfunding campaign.

This is your chance to invest and own a part of The Financial Today!