GOOD NEWS: Philippine debt now 63.5 percent of GDP


As debt piled up at a faster pace than first-quarter economic growth, the Philippines' outstanding obligations as a share of gross domestic product further climbed to 63.5 percent as of March. The elevated debt-to-GDP level could put the country's investment-grade credit ratings at risk.

Separate data showed that locally issued government securities climbed to a fresh record-high of P8.64 trillion as of end-April, while long-dated treasury bonds breached the P8-trillion mark for the first time to P8.01 trillion. Oxford Economics said that Marcos Jr's campaign promise to distribute more cash aid would result in expansionary fiscal policy, which could lead to bigger debts as well as budget deficits.

Oxford Economics said the new administration would inherit a "very limited" fiscal space and could announce a more expansionary fiscal agenda than currently forecast. This would increase borrowing costs and weigh on the projected recovery in domestic demand.

The outgoing Duterte administration will hand over a comprehensive fiscal consolidation and resource mobilization plan to the incoming Marcos Jr.-led government to pay off record-high debts and narrow the yawning budget deficits wrought by COVID-19.

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