Monday, July 06, 2009 [ manilatimes.net ]
By Lailany P. Gomez, Reporter
THE Philippines’ debt stock would balloon next year as the government may have to borrow more from domestic sources to prop up a weakening economy, data from the Department of Finance showed.
The government’s debt stock may inch up 4.65 percent to P4.698 trillion from the expected P4.489 trillion this year.
Of the total for next year, about P2.752 trillion will be sourced from domestic creditors and P1.946 trillion from foreign lenders.
Next year’s debt figure will be equal to 56.3 percent of the country’s gross domestic product (GDP), down from 57.6 percent this year, but still the highest among Asian countries
An indicator of economic performance, GDP is the amount of goods and services produced in a country. The debt-to-GDP ratio is a key measure of how manageable is a country’s obligation relative to its annual economic output, with a declining ratio viewed favorable as this means the country would allot a smaller amount to pay off its debt.
Pundits had warned that lower economic growth, coupled with a higher budget deficit and rising borrowing costs, could accelerate the vulnerability of countries like the Philippines to debt stress.
They said the country’s debt-to-GDP ratio might rise by 15 percent by 2015 in a scenario of a higher primary deficit to GDP; by 5.1 percent amid lower nominal GDP growth rate; by 3 percent on higher nominal interest rates on public debt; and by 12.7 percent on a combination of the three shocks.
The government’s debt went up 8.9 percent to P4.229 trillion in the first quarter this year from P3.881 trillion last year.
On Friday, New York-based Standard and Poor’s (S&P) kept its below investment-grade or junk credit rating for the Philippines of “BB-” for long term and “B” for short-term foreign-currency debt.
S&P also affirmed the “BB+” long-term and “B” short-term local-currency sovereign credit ratings.
The credit rating firm gave a stable outlook on its credit scores for the Philippines.