Manila: The government continues to manage the large debt it has inherited from the previous administration by growing the economy faster, thus bringing borrowings down to a sustainable level and below the 70 percent international threshold, the Department of Finance (DOF) said. In a statement Thursday, the DOF said the national government's debt, which amounted to PHP16.75 trillion as of end-April this year, is still relatively lower than most countries in Asia.
According to Philippines News Agency, Japan's total debt is at PHP485.94 trillion; Singapore's at PHP53.68 trillion; South Korea's at PHP46.89 trillion; Indonesia's at PHP31.37 trillion; and Thailand's at PHP17.73 trillion. The Marcos administration inherited a PHP12.79-trillion debt when it took office in 2022. The Duterte administration added PHP6.84 trillion in debt due to the pandemic, surpassing the combined borrowings of all previous administrations.
The DOF said that despite inheriting the larger debt stock, the current administration already made improvements to the country's debt statistics by reducing the debt-to-GDP (gross domestic product) ratio to 60.7 percent in 2024 through prudent debt management strategy. With the economy continuing to grow faster, reaching about PHP36.8 trillion in 2028, the DOF said the country remains on track to reduce the NG debt-to-GDP ratio to below 60 percent by the end of the President's term.
As of end-April, domestic debt continued to comprise the majority of the total debt stock. The DOF said that since a large chunk of the borrowing remains local, this means that the interest payments are being circulated back into the economy. Under Finance Secretary Ralph Recto, the Bureau of the Treasury (BTr) is adopting an 80:20 borrowing mix strategy in favor of domestic sources to support the development of local capital markets and mitigate foreign exchange risks.
The DOF noted that tax collections also continue to grow, reaching PHP1.43 trillion in the first four months of the year, up by 11.49 percent. The tax collections will allow the government to fund the President's priority programs and projects without imposing new taxes on the people and keeping debt growth well within sustainable levels.
The DOF said the government's strict adherence to fiscal discipline also allowed the country to earn a rating upgrade of A- from Japan's Rating and Investment Information Inc. (R and I) and an outlook upgrade to positive from S and P Global. "Securing a credit rating upgrade and affirmation signals high investor confidence in the Philippines' economic performance, increasing investor interest in Philippine bonds, and resulting in lower borrowing costs for the government," the DOF said.
"In return, these borrowings are reinvested into the economy through growth-enhancing investments, such as infrastructure, education, agriculture, health, and social services that produce more jobs for the Filipino people," it added.
