The Department of Finance said on Friday that the share of debt to the country’s economy slid further as of September this year as the gross domestic product continued to grow faster than government liabilities.
In his report to Finance Secretary Carlos Dominguez III, DOF Undersecretary Gil Beltran said that the government’s debt-to-GDP ratio further improved to 44.2 percent by end-September from 44.7 percent in the same month in 2015.
“Debt management measures led to the continuing drop in the debt-GDP ratio to 44.2 percent as of September 2016, an improvement from end-2015 ratio of 44.7 percent,” Beltran pointed in the report.
Beltran, who also serves as the DOF’s chief economist, also made a projection that the debt-to-GDP ratio is projected to sustain the yearly decline until falling to about 35 percent by the end of the administration of President Duterte, as he also took note of the national government debt, as a proportion of GDP, had continually dropped from 52.4 percent in 2010 to 44.7 percent in 2015.
The agency’s chief economist is also expecting the debt-to-GDP ratio to remain very manageable for the final three months of the year as the economy expands at a faster pace than government liabilities.
“Strong fiscal fundamentals will continue to underpin robust economic growth during the rest of the year,” he added.
In the same report, Beltran also emphasized that the increased public spending during the first three quarters of the year contributed 0.87 percentage points or 12.4 percent of the 7.0 percent GDP growth, adding that the large bulk of the expenditure growth went to public works construction, which rose 30.5 percent in real terms.
He also took note of the decrease on the proportion of the government’s interest payments to its total expenditures to 13.4 percent during the period from 13.9 percent in the same quarter last year.
He said the government’s expenditure exceeded nominal GDP growth with heightened public spending during the first nine months of the year.
Data presented in the report added that the country’s GDP grew by 7.0 percent in January to September, but government expenditures increased by 14.1 percent during the same period.
The report also mentioned the tax effort of the national government that remained at 14.21 percent at end-September, while revenue effort slid to 15.9 percent from 16.83 percent last year.
“Excluding oil and rice taxes, revenue effort would have declined by only 0.16 percentage point,” Beltran said, adding that tax effort stood still at 14.2 percent as oil revenues continued their downward plunge.
Netting out the effects of the oil price decline and rice, tax effort rose by 0.11 percentage point, he added.
The Bureau of Internal Revenue’s tax effort improved to 11.31 percent from 11.27 percent, while the Bureau of Customs’ figure slightly fell to 2.78 percent from 2.81 percent.
