Philippines’ Debt Ratio Widens as Pandemic Rages

(Bloomberg) -- The Philippine government's outstanding debt reached 11.7 trillion pesos ($229 billion) at end-December, up by a fifth from a year ago, according to the Bureau of the Treasury.

The debt-to-GDP ratio widened to 60.5% in 2021 from 54.6% in the year previous. The Treasury, in a statement on Tuesday, said the ratio is still “within the accepted sustainable threshold as the economy continues to recover from the effects of the pandemic.” 

While the latest debt stock is slightly below a record posted in October following some payments, it still shows that the coronavirus pandemic has reduced business activity and slowed tax collections, said Michael Ricafort, an economist at Rizal Commercial Banking Corp. in Manila. Economic reopening would narrow the budget deficit and reduce the need for borrowings, he said. 

Central bank Governor Benjamin Diokno had brushed off concerns on rising borrowings, saying the 60% debt-to-GDP ratio threshold which analysts consider manageable doesn't apply to current events. The government had forecast the debt ratio to rise to 60.8% this year, before declining to 60.7% in 2023 and 59.7% in 2024.

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