SENATE President Pro Tempore Ralph Recto has filed a bill seeking to put a cap on the Philippines' external debt at 50 percent of the Gross Domestic Product (GDP).
He cited a debt-to-GDP ratio of 41.8 percent in 2018, on a debt stock of P7.3 trillion and GDP value of P17.4 trillion.
In his statement released Friday, July 19, 2019, Recto said the cap will not "handcuff the government" from securing loans to fund infrastructure projects "but merely sets the red line in the debt meter that this and future governments must not hit."
"It is better to impose a ceiling by law to shield the government, present and future, from piling up debt," Recto said. "We set it at 50 percent of GDP, with the prohibition that the national credit card shall not be maxed out."
"Having this limit will force government to observe credit discipline, constantly monitor the debt needle, and deliver them from the temptation of accepting donor-driven projects of dubious benefits to the people," Recto said.
His bill defines total indebtedness as including those backed by the sovereign guaranty of the Republic of the Philippines.
It also defines other conditions which allow the debt ceiling to be "temporarily breached when there are extraneous factors beyond its control including occurrence of catastrophic emergencies of national proportion, as may be declared by the President, and upon consultation with both Houses of Congress."
As of end-2018, the Bangko Sentral ng Pilipinas (BSP) reported that the Philippines’ outstanding external debt stood at US$78.9 billion, or 23.9 percent of the GDP.
The country's external debt increased to US$80.4 billion as of March 2019, about 24 percent of the 2018 GDP. (Ryniel Berlanga/SunStar Philippines)