The monetary board of the Bangko Sentral ng Pilipinas (BSP) on Friday approved the government plan to borrow $2.7 billion more from overseas creditors in the quarter ending September this year.
The borrowings add to an already fairly indebted public sector equal to 60.9 percent of local output, measured as the gross domestic product (GDP), much higher than public sector debt of only 60.4 percent of GDP just three months earlier.
The BSP said the sovereign borrowings relate to four project loans totaling $1.95 billion and one program loan amounting to $750 million to help finance the country’s economic recovery, support environment protection and climate resilient programs, as well as transport and agricultural sector projects.
Bureau of the Treasury data show government debt rising sharply from only 39.6 percent of GDP in 2019 to 54.6 percent of GDP in 2020 and 60.4 percent of GDP in 2021.
Government debt as percent of GDP has trended steadily lower the past 10 years when it averaged 49.2 percent of GDP in 2013 to a low of 39.6 percent of GDP in 2019 before sharply climbing back up again since then.
The country’s investors and creditors keep a close tab of the debt-to-GDP ratio as this tells them quickly of its ability to meet future payments on its foreign currency obligations.
The debt-to-GDP ratio also helps determine how much it would cost the government to borrow from creditors, whether domestic or foreign, given the extent of its indebtedness.
Finance and monetary officials have since maintained that at 60 percent of GDP, the country’s debt is at the level considered within global norm.
