DOF Economic Bulletin on External Debt


MANILA, Apr. 3 — The country’s external debt increased to 25.2% of Gross National Income (GNI) as of the end of 2020 from 20.2% in in 2019. As a percent of Goods and Services and Primary Income, it also climbed to 88.1% from 64.6%. The increase is primarily due to public sector debt which expanded from US$42.8B to US$58.1B. (Table 1)

Compared with two decades ago when the country was recovering from the Asian financial crisis, external debt ratios in 2020 were significantly lower at 30.9 percentage points lower than the debt-GNI ratio and 18.1 percentage points lower than the debt-exports ratio in 2000. 

Compared with those of its Asian peers, the latest data from the World Bank show that the external debt ratios of the Philippines are relatively low. As a percent of GNI, the Philippines’ external debt ratio is only 20.19%, compared to the 28.95% average for 6 Asian economies in 2019 (Table 2). The country’s ratio is the third lowest behind China and Indonesia and is 8.76 percentage points lower than the average for 2019. 

DOF View

The Philippines’ prudent debt policy has enabled the country to strengthen its defenses against external shocks like the COVID-19 pandemic. This is one of the reasons for the strong confidence of investors in the Philippine economy. Nevertheless, we must continue to prudently manage our fiscal situation and continue to observe fiscal responsibility.