PH HOUSEHOLDS, CORPORATES’ DEBT RATIO EASED IN Q1

The share of Philippine households and businesses’ debt to the economy further declined in the first quarter following a stronger-than-expected growth despite economic activities tempered by the surge in COVID-19 cases at the start of this year.

In its latest Global Debt Monitor report, the Washington-based Institute of International Finance (IIF) estimated the government debt as a share of gross domestic product (GDP) to have climbed to 58.1 percent as of end-March from 54.5 percent a year ago. Credit rating agencies are closely watching the general government debt, or the combined obligations of the national government, local governments and social security institutions, less their bond holdings.

Among emerging Asian markets, the Philippines’ first-quarter general government debt ratio was below Singapore’s 146.3 percent, India’s 84.7 percent, Pakistan’s 73.2 percent, Hong Kong’s 71.1 percent, China’s 70.1 percent and Malaysia’s 63.5 percent. The Philippines’ public debt ratio was above Thailand’s 53.7 percent, South Korea’s 44.6 percent, Vietnam’s 40.6 percent and Indonesia’s 40.3 percent, the IIF’s estimates showed.

Among the 11 emerging Asian economies in the IIF’s report, only the Philippines, China and Thailand raised their public debt levels compared to a year ago.

On the flip slide, IIF data showed that the share of debts incurred by households, nonfinancial corporations and the financial sector in the Philippines declined during the January-to-March period.

Omicron fallout

Household debt as a share to GDP eased to 15.3 percent from 16.9 percent a year ago. Nonfinancial corporations’ debt ratio dropped to 25.9 percent in the first quarter from 33.3 percent during the same three-month period last year, while the financial firms’ outstanding obligations as a percentage of GDP declined to 10.8 percent from 12.2 percent.

“I think it’s because of the Omicron surge in the first quarter, which lent uncertainty,” Security Bank chief economist Robert Dan Roces told the Inquirer. Economists had said borrowings among households and firms have been tempered by lingering uncertainty wrought by the prolonged COVID-19 pandemic.

The IIF said that “emerging Asia has seen the biggest increases in debt ratios since the first quarter of 2021” up to date, although in the Philippine case, total government, households and nonfinancial corporates’ debt-toGDP were lower by about 5 percentage points year-on-year due to slower private-sector borrowings.