The Department of Finance (DOF) said the country’s external debt as a ratio to Gross National Income (GNI) increased to 25.2 percent as of end-2020 from 20.2 percent in 2019.
“As a percent of Goods and Services and Primary Income, it also climbed to 88.1 percent from 64.6 percent,” the DOF said in a statement.
The DOF added the increase is primarily due to public sector debt which expanded from $42.8 billion to $58.1 billion.
“Compared with two decades ago when the country was recovering from the Asian financial crisis, external debt ratios in 2020 were significantly lower at 30.9 percentage points lower than the debt-GNI ratio and 18.1 percentage points lower than the debt-exports ratio in 2000,” the DOF said.
Compared with those of its Asian peers meanwhile, the latest data from the World Bank show that the external debt ratios of the Philippines are relatively low, the DOF also stressed.
“As a percent of GNI, the Philippines’ external debt ratio is only 20.19 percent, compared to the 28.95 percent average for 6 Asian economies in 2019. The country’s ratio is the third lowest behind China and Indonesia and is 8.76 percentage points lower than the average for 2019,” it said.
“The Philippines’ prudent debt policy has enabled the country to strengthen its defenses against external shocks like the COVID-19 pandemic. This is one of the reasons for the strong confidence of investors in the Philippine economy. Nevertheless, we must continue to prudently manage our fiscal situation and continue to observe fiscal responsibility,” the DOF said. – Ruelle Castro