MANILA, Philippines – The government’s debt in proportion to the size of the economy is seen to decline further this year to 47.7 percent, according to one of the country’s top economic managers.
Finance Secretary Cesar Purisima, part of the Aquino administration’s economic team who made a fresh pitch to Japanese investors to explore opportunities in the Philippines, said the government remains on track to trim the ratio of its debt to gross domestic product (debt-to-GDP) further from 49.2 percent as of the end of 2013.
Speaking before Japanese government officials and businessmen, Purisima said the continuing trend of decreasing debt would ensure sustained fiscal space, leading to a stronger Philippine economy.
Purisima said the Aquino administration continues to pursue a proactive fiscal, prudent monetary policy.
“Our debt to GDP ratio used to hover in the 60 to 80 percent range in the early 2000s… We have lessened our exposure to risks in the global financial market by decreasing foreign debt to 34.3 percent,” Purisima said.
Aside from this, the government has lengthened the average maturity of the Philippines’ total debt portfolio from 8.8 years to 10 years, Purisima said.
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Purisima said the impact of interest payments on the country’s revenues has likewise gone down significantly.
“For the third year in a row in 2013, total revenue and tax revenue growths outpaced the nominal GDP growth. While nominal GDP grew 9.3 percent in 2013, total revenues rose 11.8 percent and tax revenues by 12.8 percent,” the finance chief said.
Revenue and tax collections as percent of GDP in the past three years have seen an upward trend given the string of reforms implemented by both the Bureau of Internal Revenue and Bureau of Customs.
With more efficient collection of revenues, the government has managed to keep its budget deficit well within its two percent goal.
As a result, the government’s revenue effort has improved to 13.7 percent of GDP and tax effort to 15.6 percent from 13.7 percent.
Purisima said the government would continue to rely on local borrowings to avoid foreign exchange risks.
With improving revenues, the Aquino administration is confident in providing more investments in people and more public spending for infrastructure.
“By building on our own revenues, we expect to see more investments in key growth sectors. We’re also accelerating reforms to better reap the opportunities that ASEAN integration will bring,” Purisima said.
“We are prioritizing efforts that will make it easier to do business in the Philippines,” he added.
