GOVT DEBT SLIGHTLY UP, BUT FOREIGN BORROWINGS  LOWER

MANILA, March 14, 2006
 (MANILA TIMES) THE Philippine government’s debt last year rose slightly from 2004 despite its improving fiscal position.

At P3.89 trillion at end-December, the national government’s debt would translate to each Filipino owing the country’s creditors some P45,764.

This was two percent higher than the end-2004 levels.

However, obligations to foreign creditors, accounting for 44 percent of the total debt, declined by 4.8 percent from last year’s figures, which the Bureau of Treasury attributed to a stronger peso vis-à-vis the dollar. This was partially offset by P95 billion in additional borrowings.

The remaining 56 percent of the government’s debt was owed to local creditors, borrowings from whom rose 8.1 percent from 2004, with the net issuance of government securities or IOUs.

Meanwhile, the national government’s contingent debt, consisting mainly of guarantees issued to borrowings made by its units, declined from P834 billion in 2004 to P586 billion last year.

Net repayments and net appreciation of the peso against the dollar resulted to the decline of about P262 billion in foreign contingent liabilities.

A higher debt notwithstanding, government’s obligations as a share of the country’s gross domestic product (GDP), however, improved to 72 percent last year from 79 percent in 2004.

The national government debt-to-GDP ratio is a measure of how manageable a country’s financial obligations is when compared with its economic output, which in turn is measured by the GDP.

National Treasurer Omar T. Cruz ascribed the lower debt-to-GDP ratio to the government’s lower budget deficit last year, and the subsequent reduction in the amount of borrowings required to cover this revenue shortfall.

Cruz explained that debt eases if the government borrows less while the economy is growing, which is consistent with the government’s aim of bringing down debt to 56 percent of GDP by 2008. --With Likha Cuevas


Chief News Editor: Sol Jose Vanzi

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