Diokno counters World Bank report
Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno refuted a recent World Bank report that discussed the rising loan defaults of the Philippines.
During a virtual briefing, Diokno said that the country’s banks, as well as the Micro, Small, and Medium Enterprises (MSMEs), are well prepared during the COVID-19 pandemic and are not “under threat at the moment.”
The World Bank stated that “Loan defaults have been on the rise in India, Kenya, the Philippines, and a growing number of other middle-income countries,” adding that Manila’s non-performing loan (NPL) ratio could jump to 8.2% this year.
The country earlier imposed grace periods on debt payments under the Bayanihan 1 and 2 laws, with the last moratorium effective only until the end of December.
While the Philippines NPL ratio declined to an 11-month low of 3.99% last year, it is still more than the 2020’s 3.63% record.
Diokno assured the public that the government has managed the percentage of its total outstanding loans to the overall economy.
The BSP official added that most loans are based on fixed terms so it will not bring any problems to the country’s finances.
Last 2021, the Philippines recorded an ₱11.728 trillion debt stock, with a debt-to-GDP ratio of 60.5%.
