NG outstanding debt surges to record PHP 17.56T as of end-July

The national government’s (NG) outstanding debt ballooned to a record PHP 17.56 trillion at the end of July, breaching its full-year projection for 2025, data from the Bureau of the Treasury (BTr) showed.

The latest data from the BTr showed outstanding debt surged by 11.9% from PHP 15.69 trillion in July 2024.

This was already 1.15% higher than the PHP 17.36-trillion projected debt by end-2025.

Despite surpassing the 2025 projection, the Treasury said the debt stock is expected to decline by yearend as the government pays off PHP 814.2 billion in domestic bonds by December and as “fundraising activities wind down.”

Month on month, NG debt inched up by 1.7% from PHP 17.27 trillion in June, 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 bondholders and other investors.

“To mitigate exposure to foreign exchange risk, the government continued to favor domestic borrowings to deepen the local capital market, attaining a financing blend comprised of 76% domestic financing and 24% external borrowing in the first seven months of the year,” the Treasury said.

“As a result, the domestic component of the debt stock improved to 68.9% at the end of July from 68.1% at the end of 2024.”

Domestic borrowings increased by 12.6% to PHP 12.11 trillion as of end-July from PHP 10.75 trillion in the same month last year.

This was already 0.52% higher than the PHP 12.04-trillion year-end domestic debt projection.

Month on month, domestic borrowings slightly went up by 1.3% from PHP 11.95 trillion at end-June.

Domestic borrowings were made up mostly of government securities.

On the other hand, external debt rose by 10.5% to PHP 5.46 trillion as of end-July from PHP 4.94 trillion a year ago. This also exceeded the PHP 5.32-trillion external debt projection this year by 2.63%.

Month on month, external debt inched up by 2.6% from PHP 5.32 trillion at end-June.

Foreign debt was composed mainly of PHP 2.79 trillion in global bonds and PHP 2.67 trillion in loans.

External debt securities were made up of PHP 2.37 trillion in US dollar bonds, PHP 252.46 billion in euro bonds, PHP 58.5 billion in Japanese yen bonds, PHP 58.19 billion in Islamic certificates and PHP 54.77 billion in peso global bonds.

As of end-July, the NG-guaranteed obligations rose by 2.4% to PHP 352.97 billion from PHP 344.79 billion a year ago.

Month on month, it also edged higher by 2.3% from the end-June level of PHP 345.11 billion.

“The Marcos, Jr. administration remains steadfast in its commitment to prudent debt management by leveraging strong investor confidence in peso-denominated securities while ensuring that borrowings are at the lowest possible cost and support fiscal sustainability, inclusive growth, and a stronger Philippine economy,” the Treasury said.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said debt rose as the government ramped up borrowings to plug the widening budget gap.

From January-to-July period, the fiscal deficit widened by 22.04% to PHP 784.4 billion amid faster state disbursements. This was on track to hit the revised PHP 1.56-trillion full-year deficit ceiling, the BTr said.

“(The debt) could possibly breach above PHP 18 trillion by end-2025 at the rate of the year-to-date increase if not curbed through narrower budget deficits in the coming months,” Mr. Ricafort said.

However, he noted that this could be partially offset by the settlement of large maturing NG obligations, particularly in August and September.

“This (rising debt) is concerning but not entirely unexpected given sustained borrowing needs, a weaker Philippine peso, and spending demands tied to infrastructure, subsidies, and tariff-related buffers,” Philippine Institute for Development Studies Senior Research Fellow John Paolo R. Rivera said in a Viber message.

Mr. Rivera said it will be likely that the NG debt level will exceed the year-end projection if current trends persist, such as “modest revenue growth” and “large spending needs such as flood control, defense, and infrastructure projects.”

Earlier, the Finance department projected outstanding debt to reach PHP 19.1 trillion by 2026, rising to PHP 20.5 trillion by 2027, PHP 21.9 trillion by 2028, and PHP 23.4 trillion by 2029. By 2030, outstanding debt is expected to reach PHP 24.7 trillion.

At the end of the second quarter, NG debt as a share of gross domestic product surged to 63.1%, the highest since 2005. This is above the 60% debt-to-GDP threshold considered by multilateral lenders to be manageable for developing economies. 

The DoF expects the debt-to-GDP ratio to ease to 61.3% by end-2025 and eventually fall to 58% by 2030. — Aubrey Rose A. Inosante