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The Philippines’ outstanding debt climbed to a record PHP 17.708 trillion at the end of 2025, exceeding the government’s projection amid increased issuances and a weaker peso.

The National Government’s (NG) end-2025 outstanding debt rose by 10.32% from the PHP 16.05 trillion recorded in the previous year, according to data released by the Bureau of the Treasury (BTr) on Tuesday.

This was also 2% higher than the PHP 17.36-trillion projected year-end level.

Month on month, the debt stock inched up by 0.34% from PHP 17.65 trillion at end-November.

“The increase is due to the government’s strategic net issuance of debt instruments to fund development programs, as well as the valuation effects of peso depreciation against the US dollar and third currencies,” the BTr said in a statement.

The peso ended 2025 at PHP 58.79 against the US dollar, weakening by 94.3 centavos or 1.63% from its PHP 57.847 finish in 2024. It also fell against the euro, closing at PHP 69.0547 from PHP 59.9179 the prior year. Against the yen, it dropped to PHP 0.3753 from PHP 0.3688.

This brought the outstanding debt as a share of gross domestic product (GDP) to 63.2% as of end-2025, up from 60.7% a year earlier, the Treasury said.

This is the highest annual debt-to-GDP ratio in 20 years or since the 65.7% in 2005 and is above the 60% threshold considered by multilateral lenders to be manageable for developing economies.

This is also higher than the government’s end-2025 projection of a 61.3% ratio under its updated medium-term fiscal framework.

Philippine GDP growth slowed to 4.4% in 2025 from 5.7% in 2024 and missing the government’s 5.5%-6.5% target. This was the economy’s worst performance in five years or since the 9.5% contraction in 2020 due to the coronavirus pandemic. Outside of the pandemic, this was the weakest annual expansion since the 3.9% in 2011.

Despite the higher end-2025 debt level, the BTr said the country’s debt profile “remained resilient” as 68.4% of borrowings were from domestic sources.

“By prioritizing peso-denominated financing, which is predominantly held domestically, the government reduces exposure to exchange rate volatility. It also keeps interest payments within the domestic economy and provides Filipinos with a stable and secure investment option,” it said.

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

Broken down, domestic debt grew by 10.85% to PHP 12.116 trillion as of December 2025 from PHP 10.93 trillion at end-2024. This was 0.66% above the PHP 12.04-trillion year-end projection.

The Treasury attributed the year-on-year increase to the net issuance of government securities via its regular auctions and an offering of five-year retail Treasury bonds in August, through which it raised PHP 507.16 billion.

Month on month, domestic borrowings slipped by 0.1% from P12.117 at end-November.

Meanwhile, external liabilities rose by 9.19% to PHP 5.59 trillion at end-2025 from PHP 5.12 trillion in 2024. This was also higher than the PHP 5.32-trillion estimate and also went up by 1.1% from PHP 5.53 trillion at end-November.

“This is driven by the issuance of new global bonds, net availment of official development assistance from international development partners, as well as the upward revaluation of foreign currency-denominated debt brought about by unfavorable exchange rate movements,” the BTr said.

Outstanding foreign debt was composed of PHP 2.82 trillion in global bond issuances and PHP 2.77 trillion in loans.

External debt securities were made up of PHP 2.39 trillion in US dollar bonds, PHP 262.41 billion in euro bonds, PHP 58.79 billion in Islamic certificates, PHP 56.85 billion in Japanese yen bonds, and PHP 54.77 billion in peso global bonds.

The government raised USD 4.5 billion from the international market last year as it issued US dollar-denominated global bonds, raising USD 2 billion in May and USD 2.5 billion in August.

“For the full year, the NG raised PHP 1.18 trillion in net domestic financing, demonstrating sustained investor confidence in government securities amid evolving market conditions,” the BTr said.

“External financing remained prudent and largely concessional. This results in a net external financing level of PHP 317.02 billion from global bond issuances and program and project loans to support infrastructure, social reform, and agriculture and industry sectors,” it added.

Meanwhile, NG-guaranteed liabilities slipped by 0.6% to PHP 344.57 billion at end-December from PHP 346.66 billion in the previous year due to net repayments of both domestic and external guarantees.

“Guaranteed debt remained manageable at only around 1.2% of GDP, indicating minimal contingent debt risks,” the BTr said.

Month on month, guaranteed debt dipped by 3.22% from PHP 356.04 billion at end-November.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the higher debt stock at end‑2025 reflected an increase in borrowings to finance a bigger budget gap. The government’s budget deficit widened to PHP 1.26 trillion in the first 11 months of 2025 from the PHP 1.18-billion gap in the same period in 2024.

“For the coming months, the outstanding National Government debt could go to new record highs amid new National Government borrowings in recent months and also the need to hedge both local and foreign borrowings of the National Government in view of the Trump factor and other geopolitical risk factors,” he said.

Jonathan L. Ravelas, a senior adviser at Reyes Tacandong & Co., said the record-high debt shows that the government’s fiscal space is tightening.

“We need faster revenue growth, stronger spending discipline, and reforms that boost productivity,” he said in a Viber message.

Mr. Ravelas added that a weaker peso, which drives up the value of the government’s obligations, will remain a challenge in the months ahead.

Based on the 2026 Budget of Expenditures and Sources of Financing, the outstanding debt is projected to balloon to a record PHP 19.06 trillion by the end of 2026, or PHP 13.28 trillion in domestic obligations and PHP 5.78 trillion in external liabilities. The Marcos administration plans to borrow PHP 2.68 trillion this year, or PHP 2.05 trillion from the domestic market and PHP 627.1 billion from external sources.

The government expects the debt-to-GDP ratio to settle at 61.8% this year, 61.3% in 2027, 60.3% in 2028, 59.5% in 2029, and 58% by end-2030. — Aubrey Rose A. Inosante, Reporter

The government is targeting to sell three big-ticket real estate assets this year, which, along with the proceeds from the privatization of Caliraya‑Botocan‑Kalayaan (CBK) last year, could yield a combined P101 billion in revenues, the Department of Finance (DoF) said.

The Food Terminal, Inc. (FTI), the Mile Long Complex, and the Atrium condominium in Makati City are slated for disposal this year, the Privatization and Management Office (PMO) said in a Viber message on Feb. 2.

The PMO serves as the marketing arm of the government concerning transferred assets.

However, the Privatization Council has not approved minimum prices for these properties, it said.

“Together with the privatization of CBK, the privatization of these three assets and certain shares of stock, the NG (National Government) is targeting privatization nontax revenue of PHP 101 billion,” the PMO said.

This goal is much higher than the PHP 5-billion privatization target for 2025. The PMO has not released data on its full-year 2025 revenues.

According to a document seen by BusinessWorld last year, the FTI property in Taguig City has an estimated value of PHP 40.4 billion.

Meanwhile, the Mile Long Complex in Makati City is worth about PHP 12.26 billion. This is occupied by various tenants with buildings and has other land improvements classified as residential and commercial lots.

Also in Makati, the Atrium property, consisting of 24 condominium units and 21 parking slots, has been valued at about PHP 449 million.

Last year, the government privatized the 733.95-megawatt CBK hydroelectric power complex in Laguna, awarding it to the Thunder Consortium, which offered PHP 36.27 billion. The consortium was made up of Aboitiz Renewables, Inc., Sumitomo Corp., and Electric Power Development Co.

Analysts said the government’s PHP 101-billion privatization target for this year is ambitious due to execution.

The Marcos administration’s nontax revenue target from asset sales this year is “more of an aspirational ceiling than a realistic baseline,” Leonardo A. Lanzona, an economics professor at Ateneo de Manila University, said.

“The government has the right assets and the right intent, but Philippine privatization has a deeply entrenched pattern of ambitious targets followed by dramatic downgrades,” he said in a Messenger chat on Tuesday.

Last year’s PHP 5-billion privatization target was cut from the original PHP 101 billion as the government said it saw “slight delays” in selling properties.

“A more credible near-term expectation might be something in the PHP 30 [billion] to PHP 50-billion range — achievable if one or two of the mega-deals actually close on time — with the full PHP 101 billion being more of a 2026-2027 cumulative story rather than a single-year outcome,” Mr. Lanzona said.

Conflicting policy priorities within the Executive branch have often stalled deals and the lack of a clear directive has put assets in limbo, he added, citing the case of the FTI property. The Agriculture department has said it wants to revive the FTI’s operations, even as the DoF has long pushed for its privatization.

“The optimist in me would say that the target is ambitious but not impossible, though execution risk is high given the Philippines’ track record of delays from valuation disputes, legal challenges, and slow transaction processes,” John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies, likewise said in a Viber message.

“Achieving it will depend on market timing, investor appetite for large real estate assets, and the government’s ability to run transparent, competitive bidding without governance concerns,” he said. “Key derailment risks include weak market conditions, regulatory or court bottlenecks, and credibility issues that could discourage bidders or depress prices.” — Aubrey Rose A. Inosante

The Bangko Sentral ng Pilipinas (BSP) may deliver a sixth straight cut in February, despite the US Federal Reserve’s decision to stand pat, amid weaker-than-expected Philippine economic growth in the fourth quarter, analysts said.

“Despite the Fed standing pat, we believe BSP will be looking to domestic developments (such as) low inflation and disappointing GDP (gross domestic product) to make its call,” Metropolitan Bank & Trust Co. (Metrobank) Chief Economist Nicholas Antonio T. Mapa told BusinessWorld in a Viber message.

On Wednesday, the Fed held its benchmark rates steady at the 3.5%-3.75% range, maintaining its total cuts since September 2024 at 175 basis points (bps).

The BSP’s key policy rate stands at an over three-year low of 4.5%, bringing its interest rate differential with the Fed to 75 bps.

The Monetary Board has so far lowered benchmark borrowing costs by a cumulative 200 bps since it began its easing cycle in August 2024.

BSP Governor Eli M. Remolona, Jr. said last week that the Fed’s moves are only one of the many data points they are considering in their monetary policy decision. He added that they are now uncertain about delivering one more cut under the current easing cycle, even with a weak economy and benign inflation.

Philippine economic growth slumped to a five-year low of 3% in the fourth quarter of 2025, bringing the full-year print to 4.4%. This was below the government’s 5.5%-6.5% target for the year, as well as the BSP’s 3.8% forecast for the fourth quarter and 4.6% for the entire year.

This, Mr. Mapa said, raises the odds of deeper easing by the Monetary Board, especially as inflation remains muted.

“The disappointing (fourth-quarter) print bolsters the case for additional easing from BSP while inflation remains subdued,” he said. “(The) window for BSP to provide accommodation remains open for the time being with monetary authorities likely opting to frontload cuts while the inflation objective is still in hand.”

Metrobank sees the BSP delivering a total of 50 bps in cuts this year to bring the key interest rate to 4% by yearend.

On the other hand, John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies, said the central bank may opt to preserve easing space at its first meeting this year as the peso remains “sensitive.”

“A possible move for the BSP is a pause with a bias to cut later if inflation stays benign and growth remains soft,” he told BusinessWorld via Viber. “It helps keep the Philippine peso and inflation expectations better-anchored, especially with the currency still sensitive, while preserving easing space.”

The peso marked a new all-time low of P59.46 against the dollar on Jan. 15.

On Thursday, the local unit lost 20.5 centavos to close at P58.945 versus the greenback from its P58.74 finish on Wednesday, Bankers Association of the Philippines data showed.

“Matching the Fed’s stand is generally healthier for the peso in the near term, while any further BSP cut should be framed as contingent on inflation staying within target and on clearer evidence that demand is weakening enough to warrant added support,” Mr. Rivera said.

The Monetary Board is set to hold its first policy review this year on Feb. 19. — Katherine K. Chan

The Philippines remains on track to graduate to upper middle-income country (UMIC) status this year, despite a sharp growth slowdown in 2025, the Department of Economy, Planning, and Development (DEPDev) said.

Economy Secretary Arsenio M. Balisacan said the Philippines can still achieve UMIC status this year despite the weaker-than-expected 4.4% gross domestic product (GDP) growth last year.

“We still have to redo the numbers, but with the 4.4% growth in 2025, we should still be able to reach the average income class status,” he told a briefing on Thursday.

The Philippines is still stuck in the lower middle-income bracket, having failed to advance out of it since 1987, despite posting a higher gross national income (GNI) per capita of USD 4,470 in 2024.

Under the World Bank’s latest country classification, the Philippines’ GNI per capita was only USD 26 shy of the World Bank’s adjusted GNI per capita requirement of USD 4,496 to USD 13,935 for UMIC status.

The Washington-based lender is scheduled to release its updated annual country status thresholds in July.

Last year, Mr. Balisacan said the Philippines needs to sustain 6% growth from 2025 to 2026 to ensure its GNI per capita meets the UMIC threshold.

In 2025, Philippine GDP growth sharply slowed to 4.4%, from 5.7% in 2024. This was the weakest print in five years or since 2020 when GDP contracted by 9.5% amid the pandemic. Excluding the pandemic, it was the slowest growth since the 3.9% expansion in 2011. 

Mr. Balisacan said the economy’s potential growth still stands at 6%, which makes the government confident about achieving its long-term goal of building a predominantly middle-class society under AmBisyon Natin 2040.

“Actually, the investments that we are making in human capital, particularly education and health and infrastructure, these can elevate that potential to an even higher one — 6.5% or even 7%,” Mr. Balisacan said.

Analysts said the Philippines achieving UMIC status carries symbolic weight but cautioned that it is a weak measure of real development.

“Graduation to UMIC is important symbolically but its real economic value will depend on whether it comes with deeper structural shifts that raise living standards more broadly,” John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies, said in a Viber message.

Even modest growth can lift per capita income if supported by stable employment, remittance inflows, and manageable inflation, Mr. Rivera added.

Jose Enrique “Sonny” A. Africa, executive director of IBON Foundation, said UMIC status is a “mere bureaucratic category” used by the World Bank to guide lending and grant-making.

“It’s an extremely poor indicator of real development because, for instance, any UMIC status the Philippines might get will be amid growing poverty, hunger, and volatile poor quality work,” he said in a Viber message.

Tempered targets

At the same briefing, Mr. Balisacan said the Development Budget Coordination Committee (DBCC) had tweaked the macroeconomic assumptions for foreign exchange rate and export growth, after cutting growth targets.

On external trade assumptions, the DBCC kept the goods export growth at 2% this year, unchanged from the June meeting.

It raised its goods export growth projection to 3% in 2027, from the earlier forecast of 2%.

“For the exports of services, we are assuming 5% for 2026 and the same growth for 2027,” he said.

The peso forecast range was widened to PHP 58 to PHP 60 per dollar for 2026-2027, from the earlier projection of PHP 56 to PHP 58 per dollar for 2025 until 2028, Mr. Balisacan said.

The peso has repeatedly breached the PHP 59-a-dollar mark several times since November and sank to a record low of PHP 59.46 on Jan. 15.

At its December meeting, the DBCC cut its GDP growth target to 5-6% for this year, from 6-7% previously. It set a 5.5-6.5% growth goal for 2027.

“Now, obviously, the lower growth for next year… will impact revenue collections relative to what we initially expected,” Mr. Balisacan said.

The government is targeting to collect PHP4.824 trillion this year, about 3.19% less than the PHP 4.983 trillion goal set in the June 2025 meeting.

For 2027, the revenue collection target was cut by 4.55% to PHP 5.122 trillion, while the revenue target for 2028 was also reduced by 5.86% to PHP 5.568 trillion.

Mr. Balisacan said government efforts, particularly in light of the flood control project scandal, were focused not only on expanding expenditures but also on enhancing spending quality.

“(This will make) sure that what we spend will actually end up with better services and in the case of income transfers with the intended target groups and in many cases with low-income households,” he added. — Aubrey Rose A. Inosante, Reporter

The IT & Business Process Association of the Philippines (IBPAP) is cautiously optimistic that the industry will achieve revenue and headcount growth this year despite continued uncertainty.

IBPAP President and Chief Executive Officer Jonathan R. Madrid said there was a challenging geopolitical and macroeconomic climate in 2025, which may have affected investor confidence and appetite for expansion.

“We will continue to see some of that uncertainty as we begin 2026, but I can say that we are cautiously optimistic about another positive year of growth for the Philippine information technology and business process management (IT-BPM) industry,” Mr. Madrid told reporters on Wednesday.

In 2025, he said that the industry was able to achieve a 5% growth in export revenues to over USD 40 billion and a 4% growth in headcount to 1.9 million.

These figures, he said, are consistent with the baseline targets set under the industry’s roadmap.

While he did not share exact targets for 2026, Mr. Madrid said: “I’ll be happy if we did that (5% growth in revenues and 4% growth in headcount).”

“But you have to remember that we are coming from a bigger base and the bigger your starting base, the harder it is to maintain,” he added.

Under the roadmap, the baseline targets for 2026 are USD 42 billion in revenues and 1.97 million in headcount.

Mr. Madrid said that he expects global capability centers (GCCs), such as JPMorgan Chase, to drive the sector’s growth this year.

“I see this as a particularly positive growth because the GCCs have been amazingly successful and are growing very fast in India. They have over 1,800 GCCs there,” he said.

“Of course, India is a much bigger country with a bigger population, but we are actually positioned very well to be a very strong second to India in terms of GCCs. We have about 160 GCCs in the country now,” he added.

Mr. Madrid said growth is expected in the financial services, insurance, and healthcare sectors.

“But we will continue to see the GCC segment grow in 2026. In fact, I think it will continue to outpace the overall growth rate of the IT-BPM sector,” he added.

Challenges

Mr. Madrid said that the industry continues to struggle with the ease of doing business and the availability of employable talent.

“We have to remember that the majority of our industry is composed of foreign investors who have decided on the Philippines to set up their operations,” he said.

Mr. Madrid said investors are banking on the Philippines to deliver on its promise of a good business environment, which includes “investment incentives, a good business environment, availability of talent, good workspace, and last but not least, a competitive cost structure.”

“If we do not meet the expectations of our investors, justifying their decision to establish operations in the Philippines, then that would be a challenge,” he added.

Mr. Madrid said another challenge is to find employable talent as jobs in the IT-BPM sector continue to evolve. From simple and almost exclusively voice-based services, tasks now are more complicated and complex.

“That is why talent development and upskilling continue to be one of the biggest investments that our members make,” he said.

Before a worker in the industry becomes productive, the worker goes through a minimum of two weeks of training.

Mr. Madrid estimated the industry invests around P1.4 billion in talent development annually. This is an area where the government could also offer its support for the industry, he added.

“We have to remember that it is no longer just India and the Philippines. In the past decades, new IT-BPM destinations have emerged. And they are aiming to capture some of the market share of the Philippines,” he said.

“Countries like Egypt, Poland, South Africa, Vietnam, Malaysia, Colombia, South America, and Costa Rica are some of the destinations that global companies go to,” he added.

These destinations, he said, offer various advantages, including complementary time zones and Spanish-speaking agents, among others.

“The good news is, India and the Philippines continue to be the major players, and it should be our collective objective to protect and retain that market share,” he added. — Justine Irish D. Tabile, Reporter