DOF Economic Bulletin on National Government (NG) Debt in 2020


MANILA, Mar. 21 — The country’s National Government (NG) debt-GDP ratio rose from 39.6% in 2019 to 54.5% in 2020 but lower interest rates helped cushion its fiscal impact. (Table 1)

Interest payments rose by only 5.4%, from P360.9 billion to P380.4 billion in 2020. The ratio of interest payments to revenues thus increased from 11.50% to 13.32%, up by 1.82 percentage points but the ratio of interest payments to expenditures declined by 0.5 percentage point from 9.5% to 9.0%.

The average interest rate on NG debt declined from 4.67% in 2019 to 3.88% in 2020.

Compared with its ASEAN peers, the Philippines registered a slightly higher debt ratio vs. ASEAN 5 average of 51.5% (Table 2). ASEAN sovereign debt ranged from 38.5% to 67.6% of GDP with the Philippines at the middle of the scale.  

DOF View

The COVID-19 pandemic led to NG deficit rising to 7.6% of GDP, the highest in the country’s history. Unlike in previous high deficit episodes when government had to face both sky-high interest rates and a weakening peso, the NG emerged out of this year’s episode with lower debt service, low interest rates and a stronger peso.  

The main reason for this positive confluence of events is the strong confidence of market players in the economy backed up by coordinated fiscal and monetary policymaking.   

As long as debt is managed prudently, as shown in the above ratios, the risks from debt exposure are minimized and additional resources continue to be obtained for projects that contribute favorably to development.