DBM sets aside P1.143T for debt burden in 2027 budget; says debt manageable

The Department of Budget and Management (DBM) has allocated over P1 trillion or about 16% of the proposed P7.2-trillion national budget for 2027 for the government’s “debt burden,” mainly for the settlement of interests carried by the country’s sovereign debt.

In his remarks at the Economic Journalists Association of the Philippines (EJAP) Economic Forum in Manila on Friday, Budget Secretary Kim Robert de Leon bared that the agency set aside P1.143 trillion for debt burden under the proposed National Expenditure Program (NEP) for Fiscal Year 2027.

The Budget chief said the amount would cover “interest payments and net lending to government corporations.”

Bulk of the debt burden, in particular, was set for interest payments at P1.114 trillion.

On a broader scale, the national government’s debt service expenditure for 2027 stood at P2.704 trillion, covering interest payments and principal amortization at P1.590 trillion.

Moreover, by the end of next year, the government is expecting that the country’s sovereign debt pile will amount to P21.48 trillion, higher than the projected P19.76-trillion debt level for 2026.

As of end-June 2026, the national government’s running debt stock already surpassed the P19-trillion mark, amounting to P19.065 trillion, up by P518.98 billion from P18.546 trillion as of end-May and higher then the P17.267 trillion sovereign debt level in end-June 2025.

With this, coupled with a weaker economic growth in the first half at 2.3%, the Philippines’ debt burden stood at 66% of gross domestic product (GDP) —a level seen in 1993, when it hit 66.9%, four years before the Asian Financial Crisis, and its highest highest in 22 years or since 2004, when it ended the year at 71.6% debt-to-GDP.

Despite the ballooning debt levels, the Budget chief said that “there is nothing inherently wrong with a country having debts.”

“What matters is that money is used for the right purposes, and the government can repay it without compromising other essential programs and services,” de Leon said.

“It is important to note that government programs, activities, and projects are not mere expenses, but investments intended to achieve a minimum required economic return. Until the government can generate sufficient resources to fund investments and close our country's infrastructure and development gaps, we will need to borrow,” he said.

“Our economic managers have affirmed that the level of the Philippines' debt is manageable, given that our debt-to-GDP ratio is targeted to continue to decrease over the medium term,” he added. –NB, GMA News