THE Philippine debt-to-gross domestic product (GDP) ratio will likely settle at 60.2% this year, ASEAN+3 Macroeconomic Research Office (AMRO) said on Monday.
In its Fiscal Policy Report, AMRO forecast points to an improvement from the 60.7% it projected for the end of 2024.
The government seeks to bring the ratio down to 60.4% by the end of 2025, and to 56.3% by 2028.
“The government debt-to-GDP ratio has begun to decline or stabilize in more economies, including Indonesia, Japan, Lao PDR, Malaysia, the Philippines, and Vietnam,” AMRO said on Monday.
A ratio of 60% is considered by development banks to be manageable for economies like the Philippines.
“The debt-to-GDP ratio began to decline or stabilize in more economies (in ASEAN+3), while others saw a slower rise. Robust economic growth and high inflation helped stabilize or lower debt ratios, but high effective interest rates exerted upward pressures.”
ASEAN+3 consists of the Association of Southeast Asian Nations (ASEAN) plus China, Japan and South Korea.
“Despite signs of debt stabilization in some economies, government debt and gross financing needs are expected to remain elevated,” it said.
In February, Philippine outstanding debt rose to a fresh high of P16.63 trillion, the Bureau of the Treasury reported.
AMRO said the region should “navigate fiscal strategy through uncertainties by adopting flexible responses while remaining committed to fiscal prudence.”
At the end of 2024, the budget deficit settled at 5.7% of GDP, lower than 6.2% at the end of 2023.
In February, the deficit widened by 4.11% to P171.4 billion from a year earlier.
“Fiscal authorities should maintain agility and flexibility to respond swiftly to emerging shocks, particularly those arising from heightened risks such as more aggressive protectionist policies and escalated geopolitical tensions,” it added.
US President Donald J. Trump on April 9 paused his new reciprocal tariffs for 90 days, although a baseline 10% tariff on almost all US imports remains in effect.
The Philippines faced a 17% reciprocal tariff, which was the second lowest among Southeast Asian countries. — Aubrey Rose A. Inosante