Increased borrowings could bring debt-to-GDP ratio to 47% —NEDA

The ratio of the Philippine debt to economic growth could likely hit 47% this year given the increased borrowing to finance efforts against the coronavirus disease 2019 (COVID-19), the National Economic and Development Authority (NEDA) said Thursday.

According to Acting Socioeconomic Planning Secretary Karl Kendrick Chua, borrowing is likely to increase to 46% to 47%, given the programs needed to be funded to curb COVID-19.

"Debt-to-GDP might increase to 46% to 47% of GDP whereabout, but that is very low and manageable still, compared to our history and this is something that we should build on -- our solid fiscal responsibility and the way we manage the economy," he said in a virual briefing with the Foreign Correspondents Association of the Philippines (FOCAP).

The national government's outstanding debt grew to P7.731 trillion in 2019, bringing the debt-to-GDP ratio down to 41.5%. A lower debt-to-GDP ratio is generally seen as favorable, as it indicates that the country is able to repay its debts.

"We estimate that our debt-to-GDP (will grow) because of the need to borrow, to finance the deficit because we are not getting much taxes from business that are not making enough money because of COVID," said Chua.

Finance Secretary Carlos Dominguez III last week said the administration raised its funding commitment to aid sectors impacted by the pandemic to P1.491 trillion, equivalent to 8% of the gross domestic product (GDP) as of 2019.

Prior to this, the government earlier said it was looking to spend some P1.17 trillion for COVID-19 response measures, of which around P836.4 billion would be raised together with monetary authorities to support the economy.

The administration has since inked loan agreements with several multilateral lenders such as the Asian Development Bank (ADB) and the World Bank (WB).

"If we continue this process of ensuring solid debt management and solid fiscal economic management, then I think there should be no concern about borrowing," said Chua.

"That is going to be used to help our country recover whose returns are actually very high," Chua added. —LDF, GMA News