Philippine debt to breach P19 trillion in 2026

The Philippines’ sovereign debt is expected to balloon further, breaching P19 trillion by the end of 2026, budget documents showed.

Budget and Expenditures and Sources of Financing for the fiscal year 2026 showed the government is projecting that the total outstanding debt next year will amount to P19.057 trillion, higher than the projected P17.359-trillion debt level for 2025. 

As of end-June 2025, the national government’s running debt stock already surpassed the P17-trillion mark, amounting to P17.267 trillion, up 2.1%% from P16.918 trillion in May and 11% higher than the P15.483 trillion as of end-June 2024. 

Moreover, the Philippines ended 2024 with a sovereign debt level of P16.051 trillion, up by 9.8% from the P14.616-trillion debt level at the end-December 2023.

Meanwhile, the bulk of the projected P19.057-trillion debt for 2026 will be sourced locally at P13.28 trillion, while the remaining P5.78 trillion will come from external sources.

Also for next year, gross borrowings of the national government are expected to reach P2.682 trillion, the bulk or P2.055 trillion of which will be sourced locally while the remaining P627.104 billion will be from foreign sources.

Broken down, the government is eyeing to issue P1.995 trillion in fixed rate treasury bonds and P60 billion in treasury bills.

For next year’s foreign borrowings, the government projects program and program loans to reach P263.292 billion and P61.712 billion, respectively. Foreign bonds and other inflows, on the other hand, will amount to P302.100 billion. 

Finance Secretary Ralph Rector earlier said 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.

Recto also said that the expected P20-trillion government debt stock is still consistent with the administration’s aim to bring down the debt-to-gross domestic product (GDP) ratio to less than 60% by 2028.

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.

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.

Fiscal consolidation

In his Budget Message, Marcos said, “Revenue collections are projected to reach P4.983 trillion in 2026, 10.2% increase from the P4.520 trillion programmed amount in 2025.”

“This will be achieved through intensified digitalization initiatives in our tax collection system as well as recent tax reforms, particularly the value-added tax on non-resident digital service providers. This will be supported by the collections from the Bureau of Internal Revenue and Bureau of Customs , as well as increased receipts from non-tax revenues, such as dividends from government corporations and proceeds from privatization,” the President said.

The President further said that his administration will continue to adopt a fiscal consolidation strategy, with the fiscal deficit expected to hit 5.3% of GDP in 2026, from 5.5% in 2025, and “decreasing even further to 4.3% by 2028.”

Marcos added that social and economic services will remain the biggest contributors to the spending priorities of the government.

“From P6.082 trillion programmed for 2025, we are targeting a total of P6.630 trillion disbursements in 2026 or 21.5% of GDP,” the Chief Executive said.

“The infrastructure spending target will also be maintained at 5.0 to 6.0% of GDP,” Marcos said. — RSJ, GMA Integrated News