Philippines debt burden balloons to 33-year high at 66% in H1 2026

The Philippines concluded the first half of 2026 with a debt burden ballooning to its highest level in more than 30 years amid a record-high sovereign debt coupled with a weaker economic growth during the period.

As of end-June 2026, the country’s debt-to-gross domestic product (GDP) ratio —the amount of national government debt relative to the size of the economy— stood at 66%, up from 65.2% in the first quarter of the year and 63.2% in 2025.

This is the highest debt-to-GDP ratio since 1993, when it hit 66.9%, and is above the internationally considered manageable threshold of 60%.

The economy as measured by GDP, or the total services of goods and services, grew by slower at 2.3% in the second quarter of 2026 —its weakest footing since 2009, excluding the pandemic years, when it grew at 1.8%.

Subdued investor and consumer sentiment amid the lingering effects of the flood control corruption scandal and the inflationary pressure brought by Middle East crisis-induced global fuel price shocks, brought the first half growth at 2.6%, still behind the government’s downwardly revised target of 3.5% to 4.5% for the entire year.

The national government outstanding debt, meanwhile, ballooned to a record-high of P19.065 trillion as of the end of June, due mainly to higher borrowings both domestic and external to finance national development.

In a commentary, Rizal Commercial Banking Corp. chief economist Michael Ricafort said that the first half debt-to-GDP ratio being “above the international threshold of 60%” calls for greater urgency to narrow the national government’s budget deficit through intensified tax revenue collections and more disciplined government spending through anti-leakage, anti-wastage, anti-corruption measures to prevent further ballooning of the outstanding national government debt.”

“New and higher taxes could still be considered, as a final option, alongside other tax and fiscal reform measures, just like 20 years ago when the ratio was above 70%, though faster economic/GDP growth needed also to broaden the base/denominator of the ratio, to also eventually bring it lower/better towards the international threshold of 60% to help sustain relatively favorable credit ratings of the country at 1-3 notches above the minimum investment grade as maintained despite the COVID-19 pandemic, in an effort to help keep the country’s borrowing costs lower and at better payment terms,” Ricafort said.

“To improve and make fiscal and debt management more sustainable over the long-term and help create a more conducive environment for sustainable economic growth and development also over the long-term and for future generations,” the economist added.

President Ferdinand Marcos Jr.’s economic managers are aiming to bring down the debt-to-GDP ratio to below 60% by 2028.

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