According to a research from the Department of Finance’s senior economist Gil Beltran, the Philippines has the lowest foreign debt as a percentage of GDP (27%) among ASEAN nations in 2021.
“In Southeast Asia, the Philippines has the lowest foreign debt-to-GDP ratio among the five ASEAN nations,” he added.
Malaysia and Thailand, by contrast, had foreign debt ratios of 69.3 percent and 39 percent of GDP respectively last year. Vietnam’s foreign debt-to-GDP ratio was 38.6 percent, while Indonesia’s was 35 percent.
During the pandemic, however, the Philippines had the third highest rise in offshore debt as a proportion of GDP, at 4.8 percentage points. Thailand’s increased by 7.4 percentage points, while Malaysia’s increased by 6.7 percent.
During this time, Vietnam‘s foreign debt-to-GDP ratio increased by just 1.5 percentage points, while Indonesia’s fell by 1.1 percentage points.
Beltran said the government should exercise caution in accumulating loans in the future, since foreign debt is expected to rise to 27 percent of GDP in 2021, up from 22.2 percent in 2019.
“At 4.8 percentage points, the Philippines outperforms Indonesia and Vietnam, but falls short of Thailand and Malaysia; this indicates sustained debt management caution,” he added.
Beltran went on to say that there is no need to call an emergency, blaming the government’s pandemic response for the debt rise. He also noted that the external debt-to-GDP ratio in 2021 would be less than half of what it was in 2005, when the government began adopting a new technique to calculate its international liabilities.
External debt was 57.3 percent of GDP in 2005, with state debt accounting for 34.1 percent and private debt accounting for 23.2 percent. Government and business debt accounted for 16.2% and 10.8% of GDP, respectively, in 2021.
According to the Bangko Sentral ng Pilipinas, the Philippines’ offshore debt climbed by 8% to $106.43 billion last year, up from $98.49 billion in 2020.
Government debt increased by 10% to $63.93 billion, from $58.12 billion, while private debt increased by 5% to $42.5 billion, up from $40.37 billion.
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