Philippines ends 2024 with P16.05T sovereign debt

The Philippines concluded the year 2024 with a sovereign debt of over P16 trillion, according to data released by the Bureau of the Treasury (BTr).

The national government’s outstanding debt stood at P16.051 trillion as of end-December 2024, down slightly by 0.2% from the record P16.090 trillion debt stock recorded as of end-November 2024.

Year-on-year, however, the country’s sovereign debt grew by 9.8% from the P14.616-trillion debt seen at the end-December 2023.

“The year-on-year (YoY) increase in the debt stock is primarily attributed to the P1.31 trillion net issuance of debt instruments in line with the government’s deficit program, as well as the P208.73 billion valuation effect of US dollar strengthening, albeit advantageous third currency movements significantly trimmed the debt total by P80.74 billion,” the Treasury said, noting that the Philippine peso saw a decline against the US dollar to P57.847:$1 at the end of December last year versus the P55.418:$1 exchange rate at end-December 2023.

In emailed commentary, Rizal Commercial Banking Corp. chief economist Michael Ricafort said the year-on-year growth in the Philippines’ sovereign debt was “largely due to the continued budget deficits in recent months that needed to be financed through additional debt/borrowings.”

Likewise, Ricafort said that the weaker peso exchange rate versus the US dollar “by about 14% since 2022 also effectively increased the peso equivalent of US dollar- and other foreign currency-denominated debt of the national government.”

Domestic securities comprised the lion’s share of the end-December 2024 national government debt stock at 68.10% while foreign obligations accounted for 31.90%.

In particular, domestic government debt totaled P10.93 trillion, up 9.1% from P10.017 trillion year-on-year.

The Treasury said the net issuance of domestic securities contributed P905.31 billion to the year-on-year increase in local debt, while the local currency’s depreciation increased peso valuation of foreign-currency denominated domestic securities by P7.18 billion.

Meanwhile, the external debt of the Philippine government stood at P5.12 trillion, up 11.4% from the end-December 2023 level of P4.598 trillion.

“The year-on-year increase was mainly due to the P401.74 billion in net external debt availments, while peso depreciation against the US dollar increased the external debt valuation by P201.55 billion,” the BTr said.

“Third-currency adjustments provided an P80.74 billion downward valuation offset,” the Treasury added.

Debt-to-GDP ratio

With a P16.05-trillion sovereign debt at the end of 2024, the Philippines’ debt-to-gross domestic product (GDP) ratio clocked in around 60.7%, slightly above the government’s target of 60.6% for 2024.

Debt-to-GDP ratio measures the amount of the national government’s outstanding debt proportionate to the value of the economy during a specific period.

A lower debt-to-GDP ratio indicates that the country can pay off its debt without having adverse impacts on the economy.

The Treasury said the higher-than-estimate debt-to-GDP ratio last year was “on account of the lower-than-expected full-year real GDP growth outcome of 5.6%.”

The Philippine economy as measured by GDP grew by 5.6% in 2024, faster than 2023’s 5.5% albeit falling short of the government’s target ban of 6% to 6.5% growth.

This is also the second straight year that the Philippines missed its economic target after hitting 5.5% in 2023, which was below the 6.0% to 7.0% target for the year.

Finance Secretary Ralph Recto earlier said that the country’s sovereign debt could balloon to as much as P20 trillion by the end of President Ferdinand Marcos Jr.’s term in 2028.

The Finance chief, nonetheless, said that while the nominal debt continues to rise, the country’s economic growth would outpace the increase in debts.

Recto had said that the Philippines economy could reach a value of P37 trillion by 2028, versus a projected debt stock of P20 trillion.

The rising debt levels, the Finance chief said, reflects the government’s “conscious decision to run fiscal deficits to be able to accommodate growth-enhancing investments in infrastructure modernization, human capital development, and social protection while paying off the pandemic borrowings it inherited from the past administration.”

Due to the aggressive borrowing spree to fund response, relief, and cash aid efforts amid the COVID-19 pandemic, the country’s debt-to-GDP grew to 60.5% in 2021, higher than the 54.6% level in 2020.

Prior to the COVID-19 pandemic, the Philippines’ debt-to-GDP ratio reached a record low of 39.6% in 2019. — RSJ, GMA Integrated News