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‘Prudent’ PHL debt policy draws investors Date: July 23, 2020
By BusinessMirror | July 23, 2020

THE Department of Finance said investors continue to have strong confidence in the country due to its “prudent” debt policy that enabled it to withstand external shocks like the Covid-19 pandemic.

In an economic bulletin on Wednesday, Finance Undersecretary and Chief Economist Gil S. Beltran said the country’s external debt dropped to 19.67 percent of gross national income (GNI) as of the end of first quarter of the year from 20.98 percent in the same period in 2019.

GNI includes gross domestic product plus net factor income from abroad.

For the same period, the external debt as a percent of Goods and Services and Primary Income also dropped to 54.4 percent this year from 54.8 percent last year because of the decline in public sector debt to $38.3 billion from $40.13 billion.

“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,” Beltran said.

As of end-March this year, the country’s external debt reached $81.421 billion, higher than the $80.431 billion a year ago.

Of the $81.421-billion external debt for the first quarter, the bulk came from the private sector at $43.12 billion, while $38.30 billion was from the public sector.

Compared with two decades ago when the country was recovering from the Asian financial crisis, external debt ratios in 2020 were 41.4 percent of the debt-GNI ratio and 51.2 percent of the debt-exports ratio in 2000, he added.

Citing latest World Bank data, he pointed out that the country’s external debt ratios are also lower in 2018.

“As a percent of GNI, the Philippines’ external debt ratio is only 19.9 percent, compared to the 33.6-percent average for nine Asian economies. The country’s ratio is the third lowest behind China and India,” he said.

In 2018 India and China posted an external debt ratio as a percent of GNI of 19.3 percent and 14.5 percent, respectively.


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