Finance Secretary Carlos Dominguez 3rd said the Philippines has maintained its strong fiscal position by ensuring that the government can always afford to repay its foreign debt.

Foreign borrowings have shown to be an efficient tool for promoting economic growth and enabling speedy finance for crises, such as the current coronavirus disease 2019 (Covid-19) problem, according to Dominguez on Wednesday.

Borrowings by the government for productive investments like infrastructure projects that fuel growth and generate jobs, rather than being a burden, are beneficial to the economy, he noted.

Foreign borrowings used to help pay the country’s unplanned Covid-19 response were also efficiently used to provide emergency aid to vulnerable families and other pandemic-affected sectors of the economy, boost the country’s health care capability, keep the economy afloat, and support its quick recovery, Dominguez added.

He said that solid fiscal management allowed the Philippines to lower borrowing costs, as evidenced by the ratio of debt interest payments to expenditures, which plunged to 9.5 percent in 2019 from 13.9 percent when the current administration took office in 2016.

Dominguez further stated that the debt interest payment to income ratio has decreased significantly from 14.7 percent in 2015 to to 11.5 percent in 2019.

The Philippines’ outstanding external debt is only 25.2 percent of gross national income, which includes all money earned by a country’s citizens and enterprises, according to data from the Finance department’s International Finance Group, showing that the country is well-positioned to service foreign debt in the medium to long term.

Except for high-income countries, the Philippines has consistently performed in line with the region’s average in terms of gross international reserves (GIR) as a percentage of total external debt, Dominguez added.

At the end of 2020, the Philippines’ GIR was $110.12 billion, easily covering its short-term debt 7.8 times over.

“Moreover, external repayments can be easily met, given the sustained healthy level of GIR at 15.6 times the country’s debt service burden  in 2020,” Dominguez said.