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This is AI generated summarization, which may have errors. For context, always refer to the full article.
Claim: The administration of former president Rodrigo Duterte had greater leverage to borrow funds to help the country recover amid the pandemic because of the 39.6% debt-to-GDP (gross domestic product) ratio posted in 2019.
Rating: MISSING CONTEXT
Why we fact-checked this: The Facebook post containing the claim was posted on June 29 and has 277 reactions, 16 comments, and six shares as of writing. It was posted on the Facebook page “DUTERTE Media” which has 99,000 likes and 322,000 followers.
According to the post, the Duterte administration attained a “record low” debt-to-GDP ratio of 39.6% in 2019, saying that this “enabled the Duterte administration to have greater leverage to borrow funds to tide over the country during the height of the pandemic.” This statistic was used to support the post’s overarching claim that the Philippine economy under the Duterte administration was resilient and withstood challenges during the pandemic.
Understanding debt-to-GDP ratio: The debt-to-GDP ratio is one of many measures used by governments and economists to assess a country’s economic health. It looks at a country’s total debt in proportion to national income. The higher the debt-to-GDP ratio, the harder it is for a country to repay its debt and the higher its risk of default. For context, the Joint World Bank-International Monetary Fund (IMF) Debt Sustainability Framework’s suggested threshold for “strong debt-carrying capacity” for low-income countries is 70% of GDP, while the IMF uses 60% as its benchmark.
The facts: While it is true that the Philippines’ debt-to-GDP ratio was at its lowest in 2019, the claim suggests that this was wholly an achievement of the Duterte administration. Contrary to the post, one of the main drivers of the debt-to-GDP ratio being low in 2019 was the economic initiatives by Duterte’s predecessor.
Economic growth accelerated under the Aquino administration. Between 2010 to 2016, the country’s debt-to-GDP ratio also saw a downward trajectory, from 50.2% in 2010 improving to 40.2% in 2016. (READ: [ANALYSIS] PNoy’s legacy: We were no longer the ‘sick man of Asia’)
According to economist Gerardo Sicat, the Philippines was able to pay its debts because of the country’s strong fiscal position at the time. The Aquino administration had a small level of fiscal deficits, and kept expenditures less than the tax revenues it was receiving.
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Ballooning debt: The post claims that the Duterte administration used the low debt-to-GDP ratio for leverage “to borrow funds to tide over the country during the height of the pandemic.”
Contrary to the claim that the borrowings were for pandemic management, the government disproportionately spent its money on expenses outside the COVID-19 response, according to research and advocacy group IBON Foundation. The group said that despite gross borrowings of P5.3 trillion in 2020 to 2021, the government spent only P570 billion for pandemic response and spent more on infrastructure and debt payments.
Incomplete evaluation: The Facebook post singled out the 2019 debt-to-GDP ratio figure to imply the Duterte administration’s sound fiscal management. This evaluation, however, is incomplete as the post excluded the country’s debt-to-GDP ratio during the pandemic from 2020 to 2022 when it ballooned.
- Debt-to-GDP ratio in 2020: 54.6%
- Debt-to-GDP ratio in 2021: 60.4%
- Debt-to-GDP ratio in 2022: 60.9%
Because of the tight fiscal space inherited by the current Marcos administration from its predecessor, the Department of Finance proposed new taxes and deferred scheduled tax reductions to reduce government deficits and debt accumulation. – Luis Garcia/Rappler.com
Luis Garcia is a Rappler volunteer. He is an incoming fourth-year BS Economics student at the University of the Philippines Diliman. His fact check was vetted by a member of the Rappler Research team and a senior editor.
Keep us aware of suspicious Facebook pages, groups, accounts, websites, articles, or photos in your network by contacting us at factcheck@rappler.com. Let us battle disinformation one Fact Check at a time.
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