DOF Says That PH External Debt Is “Manageable”

Recently, the Bangko Sentral ng Pilipinas (BSP) has released figures for the total external debt of the Philippines. Numbers show that 3/5 of foreign debt was sustained by the government while the rest was incurred by the private sector. 

Retired Undersecretary Gil Beltran and the DOF’s chief economist said “at 27 percent of GDP, the country’s external debt is at a manageable level. This ratio is less than a half of the level in 2005, at 57.3 percent,”

The foreign debt of the Philippines rose to $106.4 billion in 2021 or 8.1%. This is the first time in the country’s history for foreign debt to exceed the $100 billion level. 

Although it was an all-time high record, this was still equivalent to 27% of the gross domestic product (GDP). This 27% is still lower than that of 2020 which was at 27.2.%

Despite record-breaking debts due to the fight in the two-year pandemic, the Department of Finance (DOF) says the foreign debt of the Philippines still stays the lowest in ASEAN-5 when calculated as an economy share. 

In comparison to other member states in the ASEAN-5, Malaysia stood at 69.3%, Thailand at 39%, Indonesia at 35%, and Vietnam at 38.6%.

Undersecretary Beltran also said “the recent build-up in external debt was driven by the government’s resource mobilization against the COVID-19 pandemic. In 2020, the public sector’s external debt increased by 35.8 percent but that of the private sector’s external debt actually declined by 1.1 percent. In 2021, public sector debt increased by 10 percent, and the private sector by 5.3 percent,”

The DOF approximates that these long-term, low-interest foreign debts due to COVID-19 spending will be repaid by the year 2060. 

Source: Inquirer