Philippine debt load within the sustainable threshold –DOF

While the Philippine government’s debt stock swelled to a new record-high of P10.327 trillion as of end-January 2021 amid ramped up borrowing to boost the country’s COVID-19 pandemic war chest, the debt balance was still within “sustainable” levels, according to Finance Secretary Carlos Dominguez III.

“Although we undertook emergency borrowing to support our budget deficit, our debt load remained within a sustainable threshold,” Dominguez said in his remarks during the virtual Philippines-Singapore Business Conference.

As of end-2020, the country’s debt-to-gross domestic product (GDP) ratio or the amount of debt relative to the size of the economy stood at 54.5%, a far cry from the record-low 39.6% as of end-2019.

The government earlier vowed to keep the country’s debts at a “sustainable and responsible level” or within the 60% debt-to-GDP internationally-recommended debt threshold.

“Policies and reforms allowed the country to afford a responsible level of deficit spending to cover its COVID-19 response measures, which included emergency subsidies for low-income families and workers of small businesses; assistance to micro, small and medium enterprises (MSMEs); and the expansion of medical resources to fight the pandemic,” Dominguez said.

The Philippines ended the year 2020 with a budget deficit of P1.37 trillion, as greater public spending to address the COVID-19 pandemic coupled with subdued revenue collections further squeezed state coffers.

For his part, Bangko Sentral ng Pilipinas Governor Benjamin Diokno said the “adverse impact of the COVID-19 pandemic on the Philippines will be transitory.”

“Our macroeconomic fundamentals remain sound. Medium-term growth prospects are bright,” Diokno said.

Last year, the country’s gross domestic product contracted by 9.5%, its worst performance on record since the end of World War II, due to the COVID-19 crisis. — DVM, GMA News