PH won’t risk debt default despite pandemic

The Philippines will not risk a debt default despite the economic impact of the COVID-19 pandemic due to its strong fiscal and monetary fundamentals.

Economic managers predict zero to negative 1 percent GDP growth this year, but Diokno says the country's modest debt-to-GDP ratio (40.5% in 2019) and ability to borrow at concessional rates shield it from default risk.

The BSP has implemented reforms that have made the banking industry sound and capitalized, with interest rates cut by 200 basis points and reserve requirement ratios reduced by 600 basis points since last year.

Diokno projects a 'U-shaped' recovery for next year, with GDP expected to contract in Q2 and Q3 before recovering in Q4, bouncing back to about 7.7% growth in 2021.