Debt-to-GDP ratio rises to 62% in Q1 By Reine Juvierre S. Alberto
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HE Philippines’ debt-toGDP ratio, or its outstanding debt compared against its economy, rose to 62 percent in the first quarter after the economy grew slower than expected. Latest data from the Bureau of the Treasury (BTr) showed the latest debt-to-GDP ratio went up from 60.7 percent in the fourth quarter of 2024 and 60.1 percent in the same period a year ago. This comes after the country’s gross domestic product, or the total value of all goods and services produced within a country, rose by 5.4 percent in the first quarter of the year. (See: https://business-
mirror.com.ph/2025/05/08/ p h l - e c o n o m y - s t e a d i e s - a t5-4-in-q1-2025/). This was also the result of the continued rise in the government’s outstanding debt, which reached P16.683 trillion as of the first quarter, up by 11.78 percent year-on-year from P14.925 trillion. (See: https://businessmirror.com.ph/2025/05/08/ national-government-debthits-record-p16-68-trillion-asof-end-march/). “This increase is alarming given the GDP growth has been declining,” Ateneo de Manila University economist Leonardo A. Lanzona told BusinessMirror. The higher debt-to-GDP ratio,
Lanzona said, shows that much of the government’s reforms and programs, partially financed by debt, are not producing as expected. “It’s hard to justify claims that the economy will be booming even at a much later date when the debt-to-GDP ratio is actually increasing,” Lanzona said. The current debt-to-GDP ratio is also above the internationally accepted threshold of 60 percent, which is generally considered fiscally responsible. A lower ratio means that the country has a more sustainable debt level, which impacts its ability to source financing, attract foreign investments and pay off its obligations.
Broken down, the government’s domestic debt amounted to P11.379 trillion in the first quarter. As a share of the economy, this grew to 42.3 percent in the first quarter of 2025 from 41.3 percent in the fourth quarter of 2024. Meanwhile, external debt-toGDP inched up to 19.7 percent in the first quarter from 19.4 percent in the previous quarter as external debt settled at P5.304 trillion. Lanzona said that while the expected slowdown in the global economy can result in lower interest rates, it is unlikely for countries to lend money during a global recession, as people would rather hold on to cash. See “Debt,” A2
BusinessMirror A broader look at today’s business Friday, May 9, 2025 Vol. 20 No. 208
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By Bless Aubrey Ogerio @blessogerio
LAME global uncertainties, sluggish production and frontloaded election spending for the Philippine economy’s slower-thanexpected growth in the first quarter of the year, economists said. On Thursday, the Philippine Statistics Authority (PSA) reported that the country’s GDP grew by 5.4 percent from January to March. This was slightly faster than the 5.3 percent in the fourth quarter of 2024,
but slower than the 5.9-percent growth in the same period last year. (See: https://businessmirror.com. ph/2025/05/08/phl-economysteadies-at-5-4-in-q1-2025/) See “Trade,” A2
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DTI VOWS ‘TARGETED SUPPORT,’ MARKET ACCESS TO INDUSTRIES
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HE Department of Trade and Industry (DTI) will expand market access, provide “targeted support” to industries, and attract high-quality investments to ensure inclusive and sustainable economic growth in the Philippines. In a statement on Thursday, Trade and Industry Secretary Cristina A. Roque said the 5.4-percent GDP growth in the first quarter of 2025 reflects the Philippine economy’s “robust resilience, fueled by strong consumer spending and the dynamic contributions of our industries.” Roque said DTI recognizes this growth as a “testament” to
the dedication of Filipino businesses and consumers. With this, the Trade chief said the agency is committed to build on this momentum through strategic initiatives that prioritize inclusive and sustainable economic expansion. “Our focus remains on attracting high-quality investments in key sectors, ensuring consumer protection and empowering micro, small, and medium enterprises and local industries,” Roque said. The DTI chief said the agency is “actively fostering a business-friendly environment that See “DTI,” A2
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GIR dips to $104.6B at end April, a 3-month low–BSP
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HE Philippines’s gross international reserves (GIR) dropped to a three-month low as of the end of April, as foreign investments sharply declined amid heightened global market volatility triggered by the Trump administration’s tariff offensive. Preliminary data from the Bangko Sentral ng Pilipinas (BSP) showed the country’s GIR level settled at $104.6 billion as of end-April 2025 from $106.7 billion in end-March 2025. The decline in the dollar reserves was due to the government’s withdrawal of its foreign currency deposits with the central bank, as well as the BSP’s net foreign exchange operations. Based on BSP data, however, the decline in dollar reserves came from lower foreign investments, which sank to $86.089 billion—the lowest since the $85.420 billion recorded 15 months ago or November 2023.
Foreign investments managed by the BSP under the GIR fell from $88.923 billion in endMarch 2025 and $87.126 billion in end-April 2024. Michael L. Ricafort, chief economist at Rizal Commercial Banking Corporation, said the decrease in foreign investments reflected investor caution following the April 2 “Liberation Day” when Donald Trump launched reciprocal tariffs that increased the risk of a US recession. Ricafort said this led to some market volatility worldwide, especially on the net sell-off in the US financial markets and other risky asset classes. “Though offset by some fund shifts to the safest havens such as gold, Swiss franc, euro, among others, by some of the smartest money globally, [and by gold holdings],” Ricafort added See “GIR,” A2
PESO EXCHANGE RATES n US 55.3530 n JAPAN 0.3850 n UK 73.5973 n HK 7.1321 n CHINA 7.6613 n SINGAPORE 42.7965 n AUSTRALIA 35.5754 n EU 62.6430 n KOREA 0.0396 n SAUDI ARABIA 14.7577 Source: BSP (May 8, 2025)