Sumary of Debt-to-GDP ratio at 60%:
- In a Thursday commentary, ING Bank Manila senior economist Nicholas Antonio Mapa noted that Fitch Ratings highlighted the scarring effects of the prolonged downturn in economic activity as well as how weak growth could affect the country’s overall fiscal health.
- He went on to say that the 60-percent mark is the point at which debt monitors start to worry, and it has already piqued Fitch’s interest.
- “One can only guess that the other two, Moody’s [Investors Service] and S&P [Global Ratings], are likely monitoring this metric very closely as a prolonged sortie into 60-percent territory could be a recipe for downgrades.
- Mapa said the current policy has resulted in GDP growth falling by 9.5 percent in 2020, the deficit-to-GDP ratio climbing dramatically to 9 percent in the first quarter of 2021 and the overall debt-to-GDP ratio exceeding the key 60-percent barrier closely monitored by rating agencies.