Policy reforms could boost PH investments
The continuation of policy reforms in the Philippines could help maintain the country’s investment grade despite the rising national debt, said Bangko Sentral ng Pilipinas (BSP) Monetary Board member Felipe Medalla.
During an online macroeconomic conference, Medalla stated that the reforms are among the reasons why the credit rating has not declined despite the rising ratio of public debt to GDP (gross domestic product).
The country’s debt-to-GDP ratio reached a 16-year high of 60.5% last year as the government struggled to fund its pandemic response.
This figure surpassed the 60% threshold considered manageable by multilateral lenders for developing economies.
BSP Department of Economic Research Managing Director Zeno Ronald Abenoja disclosed that a group of experts has already been formed “to ensure that the debt-to-GDP ratio of 60% does not increase so much above 60%.”
He added that they are expecting the debt ratio to reach its peak this year at 2023 at a little above 60% and will go down afterward.
The deficit ceiling last year was set at 8.2% of GDP. This 2022, the fiscal deficit ceiling is lower at 7.7% of GDP.
Recently, American credit rating firm Fitch Ratings maintained the Philippines “BBB” credit rating, but kept a negative outlook for the sovereign rating due to the country’s medium-term growth trajectory and hurdles to bringing down debt.
