Debt-To-GDP Ratio Improves, Bolsters Chances For Credit Upgrade
By CHINO S. LEYCO
December 13, 2011
Manila Bulletin
MANILA, Philippines — The ratio of the country’s debt to its total Gross Domestic Product (GDP) declined further in the first three-quarters of the year, bolstering future credit rating upgrade for the Philippines.
Data from the Department of Finance showed that the January to September debt-to-GDP ratio, one of the main indicators being looked at by credit rating agencies, fell to 51.09 percent from last year’s 52.4 percent due to “debt measures” the government undertook.
Specifically, the country’s debt increased by 4.43 percent to P4.87 trillion at end-September from same period last year’s P4.664 trillion, data from the Bureau of the Treasury showed Monday.
With a much lower debt-to-GDP ratio, it means that the country’s economy is growing faster than its debt and the government’s budget deficit is also contained.
The finance department has set a 55.5 percent debt-to-GDP goal this year after the ratio fell to 55.4 percent in 2010, which was lower than the 57 percent target.
In the third-quarter, the country’s GDP decelerated to 3.2 percent from 7.3 percent last year after a big drop in exports, bad weather and anemic government spending, making it unlikely that the country will achieve its growth target for the full year.
But despite the slower growth, fiscal and monetary authorities still insist that international credit rating agencies have underrated the Philippines' sovereign ratings by one to two notches.
The finance department and the central bank pointed that the country's macroeconomic fundamentals including reserves coverage, inflation rate, economic growth, external payments position, and debt service ratios were better compared with other countries.
The credit ratings given to the Philippines by three major international ratings firms – Moody’s, Standard & Poor’s, and Fitch Ratings – were all below investment grade.
The Philippines received a series of credit rating and credit outlook upgrades from the three international rating agencies within the first year of the administration of President Aquino.
Finance Secretary Cesar V. Purisima earlier said the finance department was confident that the Aquino administration can work to attain investment class by 2013.
Higher debt ratings reduce the cost of borrowing, making it cheaper for the Philippines to sell debt to fund spending on roads, bridges and schools.
Data from the Department of Finance showed that the January to September debt-to-GDP ratio, one of the main indicators being looked at by credit rating agencies, fell to 51.09 percent from last year’s 52.4 percent due to “debt measures” the government undertook.
Specifically, the country’s debt increased by 4.43 percent to P4.87 trillion at end-September from same period last year’s P4.664 trillion, data from the Bureau of the Treasury showed Monday.
With a much lower debt-to-GDP ratio, it means that the country’s economy is growing faster than its debt and the government’s budget deficit is also contained.
The finance department has set a 55.5 percent debt-to-GDP goal this year after the ratio fell to 55.4 percent in 2010, which was lower than the 57 percent target.
In the third-quarter, the country’s GDP decelerated to 3.2 percent from 7.3 percent last year after a big drop in exports, bad weather and anemic government spending, making it unlikely that the country will achieve its growth target for the full year.
But despite the slower growth, fiscal and monetary authorities still insist that international credit rating agencies have underrated the Philippines' sovereign ratings by one to two notches.
The finance department and the central bank pointed that the country's macroeconomic fundamentals including reserves coverage, inflation rate, economic growth, external payments position, and debt service ratios were better compared with other countries.
The credit ratings given to the Philippines by three major international ratings firms – Moody’s, Standard & Poor’s, and Fitch Ratings – were all below investment grade.
The Philippines received a series of credit rating and credit outlook upgrades from the three international rating agencies within the first year of the administration of President Aquino.
Finance Secretary Cesar V. Purisima earlier said the finance department was confident that the Aquino administration can work to attain investment class by 2013.
Higher debt ratings reduce the cost of borrowing, making it cheaper for the Philippines to sell debt to fund spending on roads, bridges and schools.
No comments:
Post a Comment