By Beatrice M. Laforga

Philippines’ outstanding debt reached P9.8 trillion (US$203.7 billion) at the end of December 2020, pushing the debt-to-GDP ratio to the highest in over a decade, as it borrowed more to fund the pandemic response.

The Bureau of the Treasury (BTr) on Tuesday reported last year’s debt stock jumped by 26.7% from P7.731 trillion at the end of 2019, due to “higher funding requirements to respond to the coronavirus disease 2019 (COVID-19) pandemic.”

Month on month, the BTr said the debt stock went down by 3.3% from the end-November level of P10.13 trillion after the government settled its outstanding loans to the central bank.

This brought the debt-to-GDP ratio to 54.5% as of end-2020, from the record low of 39.6% in 2019.Advertisement

Finance Undersecretary and Chief Economist Gil S. Beltran said the 2020 debt stock ratio was the highest in 11 years or since the 57.2% recorded in 2009, a year after the global financial crisis.

This also breached the 53.5% debt-to-GDP ratio projected by the Development Budget Coordination Committee (DBCC) for the year.

“[The debt ratio] is not alarming. The economy is expected to grow by 6.5-7.5% this year. This will enlarge the denominator and tend to reduce the ratio,” Mr. Beltran said via text message on Tuesday when asked to comment.

Mr. Beltran noted that despite the higher debt stock ratio, credit raters still maintained the sovereign ratings for the Philippines last year.

“Actually, credit rating agencies and analysts are aware of the higher deficit and the negative GDP growth and they maintained the investment grade rating. Also, peer countries are also facing higher debt ratios and even higher deficits,” he said.

Fitch Ratings affirmed last month the Philippines’ long-term foreign currency issuer default rating at “BBB” with a stable outlook, while S&P Global Ratings kept its BBB+ long-term credit rating with a stable outlook for the country in May 2020. Moody’s Investors Service also affirmed its Baa2 rating with a stable outlook last July.

Source: Business World