Finance Secretary Benjamin Diokno said over the weekend the government is on track to bringing the debt-to-GDP ratio lower than 60 percent by 2025, consistent with the aspirations set under the Medium-Term Fiscal Framework.
Diokno expressed optimism this could be achieved despite the latest data showing that the country’s total outstanding debt ballooned to a new record of P13.86 trillion as of end-March 2023 from P13.75 trillion in end-February as the government borrowed more to finance the budget deficit.
Diokno said this was a marginal 0.8-percent increase from the previous month, mostly due to the net issuance of domestic and external debt.
“As we keep up our strong growth momentum, we’ll be able to outgrow our debt and stay on track to achieve the targets set on the Medium-Term Fiscal Framework,” Diokno said.
He said the important metric that should be closely watched is the debt-to-GDP ratio. As of the first quarter of 2023, the debt-to-GDP ratio was 61.0 percent, down from 63.5 percent in the first quarter of 2022. “This is good progress,” he said.
The Medium-Term Fiscal Framework aims to bring down the debt-to-GDP ratio to less than 60 percent by 2025, then further down to 51.1 percent by 2028. It also seeks to reduce the budget deficit to 3.0 percent of GDP by 2028.
Diokno underscored the factors that reflect the sustained economic recovery from the devastating impact of the COVID-19 pandemic.
The Philippine Statistics Authority reported on Thursday that the economy grew by 6.4 percent in the first quarter of 2023, albeit slower than 8 percent a year ago and 7.1 percent in the fourth quarter amid the persistent elevated inflation that impacted consumption.
Among major emerging economies in the region that released their first-quarter 2023 real GDP growth so far, the Philippines grew the fastest, followed by Indonesia (5 percent), China (4.5 percent) and Vietnam (3.3 percent).
The country’s growth was also more rapid than the forecasted first quarter-growth rates for Malaysia (4.9 percent), India (4.6 percent) and Thailand (2.8 percent).
“This is very good news, especially in the midst of a slowing global economy and elevated inflation,” Diokno said. The growth was slightly higher than the median forecast of private analysts of about 6 percent and well within the government’s target growth range of 6 percent to 7 percent for 2023.
Diokno said the labor market remained a bright spot. The March Labor Force Survey showed a lower unemployment rate of 4.7 percent and the lowest underemployment rate at 11.2 percent since April 2005. He said the latter was a remarkable improvement from the 15.8 percent in the same month last year.
“All in all, the improvements in the labor market reflect the country’s continued economic momentum and government initiatives to improve labor conditions in the country,” Diokno said.