National Government Debt-to-GDP down to 48.9% in Q1 2013

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(DOF logo)

As of December 2012, General Government (GG) Debt stood at P4,288.7 billion or 40.6% of GDP, down from the 2011 level of 41.4% and the lowest since the metric was adopted in 1998.

National Government debt has also seen easing to 48.9% of GDP as of the first quarter of 2013, down from 51.5% at the end of 2012.

National Government Debt Holdings by the BSF up by 30% as of end-2012

The GG debt ratio’s descent is driven by the National Government (NG) purchasing more of its own debt as part of its proactive liability management agenda. In particular, the Tender-Offer transaction in November 2012, bought back P22.3 billion of expensive foreign currency debt using the Bond Sinking Fund (BSF). Holdings of NG debt by the BSF expanded by 29.9% over the previous year.

Also contributing to the ratio’s decline are the retirement of the remaining obligations of the old Central Bank and the increased holdings of government debt by the Social Security Institutions (SSIs). The Central Bank Board of Liquidators (CB-BOL) paid in full the last of its foreign obligations January 2012. Meanwhile, intra-sector debt holdings by SSIs rose from P409.6 billion to P453.7 billion from 2011 to 2012.

“The government remains committed to its proactive liability management agenda. The improvement in our debt statistics is the result of our policy of structural fiscal sustainability,” Secretary of Finance Cesar Purisima said.

Foreign Debt Mix Down

The foreign component of the consolidated GG debt also went down from 50.2% in 2011 to 44.1% in 2012 on the back of government efforts to reduce exposure to foreign currency risk.

The foreign component of NG Debt also saw a drop as of the first quarter of 2013, from 18.6% of GDP at the end of 2012 to 17.4% of GDP at the end of March 2013.

Consolidated GG Debt includes outstanding debt of the NG, the CB-BOL, SSIs, and LGUs, and nets out intra-sector holdings of government securities including those held by the BSF. It is the debt measure used by many debt watchers to assess the creditworthiness of sovereigns.