Philippine govt debt rises to new high of PHP 16.3T

The national Government’s (NG) outstanding debt hit a fresh high of PHP 16.31 trillion at the end of January as it ramped up borrowings, the Bureau of the Treasury (BTr) said on Tuesday.

Preliminary data from the BTr showed that outstanding debt jumped by 1.63% or PHP 261.47 billion to PHP 16.31 trillion from PHP 16.05 trillion at end-2024.

“The month-over-month rise in debt stock was due to the net incurrence of new domestic and external debt, as well as the impact of peso depreciation against the US dollar from PHP 57.847 at the end of 2024 to PHP 58.375 at the end of January 2025,” the Treasury said in a statement.

The debt stock rose by 10.29% from PHP 14.79 trillion at end-January 2024.

“This level remains manageable and in line with the government’s target to support economic development while ensuring fiscal sustainability,” the BTr said.

NG debt is the total amount owed by the Philippine government to creditors such as international financial institutions, development partner-countries, banks, global bond holders and other investors.

BTr data showed the bulk or 67.9% of total outstanding debt was from domestic sources, while 32.1% was from foreign creditors.

Domestic debt increased by 1.41% or PHP 153.68 billion to PHP 11.08 trillion as of January from PHP 10.93 trillion in December. Year on year, it rose by 9.07% from PHP 10.16 trillion recorded at end-January 2024.

“This was mainly due to the net issuance of government securities of PHP 152.17 billion as gross issuances of PHP 270.01 billion exceeded repayments of PHP 117.84 billion to partly finance the projected deficit for the quarter,” the BTr said.

The valuation effect of the peso depreciation against the US dollar increased domestic debt by PHP 1.51 billion in January.

Meanwhile, external debt went up by 2.1% to PHP 5.23 trillion as of end-January from PHP 5.12 trillion at end-2024.

Year on year, external debt climbed by 12.98% from PHP 4.63 trillion.

“This was driven by net availment of foreign loans amounting to PHP 59.3 billion, as well as the upward revaluation caused by unfavorable US and third currency movements amounting to PHP 46.74 billion and PHP 1.75 billion, respectively,” the Treasury said.

External debt consisted of PHP 2.7 trillion in global bonds and PHP 2.52 trillion in loans, the BTr said.

NG-guaranteed obligations slipped by 0.11% to PHP 346.27 billion as of end-January from the end-December level of PHP 346.66 billion.

Year on year, guaranteed obligations fell by 0.69% from PHP 348.66 billion.

As of end-January, the net repayment of domestic guarantees stood at PHP 1.55 billion, while external guarantees amounted to PHP 250 million.

“The redemption of matured guarantees more than offset the currency valuation adjustments on US dollar and third-currency denominated guarantees amounting to PHP 0.83 billion and PHP 0.58 billion, respectively,” the BTr said.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the increase in outstanding debt reflected the continued budget deficit in recent months that “fundamentally required additional borrowings” by the government.

The NG posted a budget deficit of PHP 1.506 trillion in 2024, narrowing by 0.38% year on year. However, it overshot the PHP 1.48-trillion deficit ceiling set by the Development Budget Coordination Committee (DBCC) by 1.48%.

Mr. Ricafort also said the weaker peso against the US dollar in January increased the peso value of external debt.

He expects the NG debt to set new records as the government ramped up borrowings in the early part of 2025.

“(There is also) the need to hedge both local and foreign borrowings of the National Government given the Trump factor that caused volatility in the global financial markets,” he said.

Oikonomia Advisory and Research, Inc. economist Reinielle Matt M. Erece said debt is expected to further increase.

“I would expect debt to rise this year as a result of both expansionary fiscal policy to promote growth and an election year, which usually results in higher government spending. Financing this spending is difficult to achieve with a tight fiscal space and borrowing might be needed,” he said.

Mr. Erece said the debt is still manageable “as long as the government improves its revenue generation and minimizes corruption.”

At end-December, the country’s debt as a share of gross domestic product (GDP) inched up to 60.7% from 60.1% a year earlier. This is slightly higher than the 60% threshold considered manageable by multilateral lenders for developing economies.

The Philippines’ debt-to-GDP ratio of 60.7% positions it “competitively” with its Southeast Asian peers, according to the BTr. It is higher than Thailand’s 56.6% and Indonesia’s 36.8%, but below Malaysia’s 64.6% and Singapore’s 173.1%.

The government aims to bring down the debt-to-GDP ratio to 60.4% this year, 60.2% in 2026 and 56.3% in 2028.

The National Government plans to borrow PHP 2.55 trillion this year — PHP 2.04 trillion from the domestic market and PHP 507.41 billion from external sources. — Aubrey Rose A. Inosante