An Assessment: The Philippine Outstanding Debt and other Economic Determinants towards its Implication on Economic Growth

Abstract

The ability to generate funds is crucial to a country's economic progress. Following the government's monetary and fiscal policies, an adequate quantity of money must be made accessible. The Philippines is no exception to borrowing. The Philippine government borrows money to pay for public goods and services, fostering economic security. The Philippine debt would increase over time due to the need to satisfy economic needs, especially now that economic development has slowed to the point of negative GDP growth and financial markets have been badly damaged by the pandemic. The goal of this study is to look at the Philippines' present condition in terms of public debt and other economic factors and see how public debt and other economic drivers affect the country's real GDP growth rate. Data from the Philippine Bureau of Treasury and the Philippine Statistics Authority were used to calculate the corresponding public debt and real GDP growth rates from 1986 to 2020. The impact of public debt and other economic variables on economic growth, as represented by the variable real GDP growth rate, was estimated using multiple regression. Furthermore, the results show that the relationship between public debt and real GDP growth is insignificant in the short run. The inflation rate, population growth, openness, and gross capital formation have no significant relationship with real GDP growth. In contrast, government consumption has a significant relationship with the real GDP growth rate. The findings might aid the National Economic Development Authority, and the government analyze the state of our economy and, as a result, strengthen the country's economic policies.