Gov’t debt to breach PHP 19T in 2026

The national government’s (NG) outstanding debt is projected to balloon to a record PHP 19.06 trillion by the end of 2026, a Department of Budget and Management (DBM) document showed on Wednesday.

This as the government is planning to borrow P2.68 trillion next year to fund the national budget.

The 2026 Budget of Expenditures and Sources of Financing showed the NG’s debt stock is expected to increase by 9.78% from the revised PHP 17.36-trillion estimate for end-2025.

Of the total, domestic debt is expected to rise by 10.27% to PHP 13.28 trillion by end-2026 from the projected PHP 12.04 trillion by end-2025.

Outstanding external debt is also seen to jump by 8.67% to PHP 5.78 trillion by end-2026 from PHP 5.31 trillion by end-2025.

Finance Secretary Ralph G. Recto told BusinessWorld the NG debt is still manageable, noting the economy will be roughly worth PHP 31.8 trillion by 2026.

As of June, the Philippines’ sovereign debt hit a fresh high of PHP 17.27 trillion, up 11.5% from PHP 15.48 trillion in the same month in 2024.

This brought the debt-to-gross domestic product (GDP) ratio to 63.1% at the end of June, the highest ratio since 2005. This is above the 60% debt-to-GDP threshold considered by multilateral lenders to be manageable for developing economies.

“It’s still consistent with our MTFF (Medium Term Fiscal Framework). But we want it at least 60%, that’s the international standard,

Budget Secretary Amenah F. Pangandaman told reporters on the sidelines of the 2026 National Expenditure Program turnover in the House of Representatives.

“Hopefully, we get to that or if possible, even lower around 59% or 58%,” Ms. Pangandaman said.

The DBM said it now expects the debt-to-GDP ratio to settle at 61.3% by end-2025, slightly higher than the previous target of 60.4%.

By end-2026, the debt-to-GDP ratio is seen to pick up to 61.8%.

Budget Assistant Secretary Romeo Matthew T. Balanquit said the higher projections for the debt-to-GDP ratio factored in expectations of slower economic growth.

Economic managers in June narrowed the GDP growth target range to 5.5-6.5% this year from the previous target of 6-8%, “reflecting a more measured and resilient outlook amid global headwinds.”

The growth target was also trimmed to 6-7% for 2026 to 2028 from 6-8% previously.

Mr. Balanquit said the massive debt was accumulated by the government during the coronavirus disease 2019 (COVID-19) pandemic.

“We are paying our debts during the pandemic times. We really need to step up our interest payments. But the good thing here is, interest rates are actually going down,” he said.

“We will also see that the cost of borrowing will be lower over the next few years. Admittedly, our interest payments are increasing,” he added.

Borrowing program

Meanwhile, the government’s borrowing program for 2026 was set at PHP 2.68 trillion, up 3.15% from PHP 2.6 trillion this year.

Mr. Balanquit said the borrowing mix remains at a 80:20 ratio in favor of domestic sources to minimize risks from external shocks.

Gross domestic borrowings were set at P2.05 trillion for 2026, 2.7% higher than the PHP 2.11-trillion program in 2025. This includes PHP 1.99 trillion in fixed-rate Treasury bonds and P60 billion in Treasury bills.

On the other hand, gross external borrowings were set at PHP 627.1 billion for next year, 28.46% higher than PHP 488.17 billion this year.

This includes PHP 302.100 billion in bonds and other inflows, PHP 263.29 billion in program loans, PHP 61.71 billion in project loans.

At the same time, the debt service bill is set at PHP 2.01 trillion in 2026, down 2.36% from PHP 2.05 trillion this year.

The government said it will spend PHP 1.06 trillion for principal amortization next year, 12.48% lower than PHP 1.21 trillion in 2025.

For interest payments, the government allocated PHP 950 billion, down by 12% from PHP 848 billion this year.

Tax revenues

For 2026, the NG aims to collect PHP 4.98 trillion in revenues, 10.24% higher than the PHP 4.52-trillion projected collection this year.

The government expects to collect PHP 4.63 trillion in tax revenues next year, a 9.96% increase from its PHP 4.21-trillion projection this year.

The Bureau of Internal Revenue is expected to collect PHP 3.58 trillion, while the Bureau of Customs is seen to generate PHP 1.01 trillion.

On the other hand, nontax revenues are expected to fall by 17.38% to PHP 249.1 billion next year from PHP 301.5 billion this year.

Proceeds from the government’s privatization program are expected to surge to PHP 101 billion in 2026 from PHP 5 billion this year. — Aubrey Rose A. Inosante, Reporter