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The national Government’s (NG) outstanding debt hit a fresh high of PHP 16.92 trillion at the end of May as new domestic debt issuances were partly offset by the stronger peso, the Bureau of the Treasury (BTr) said on Thursday.

The latest data from the BTr showed that outstanding debt inched up by 0.99% or PHP 166.2 billion to PHP 16.92 trillion from PHP 16.75 trillion at end-April.

Year on year, outstanding debt jumped by 10.24% from PHP 15.35 trillion as of end-May 2024.   

The BTr said the “minimal increase” in total debt is mainly due to the net issuances of new domestic securities, “which reflect sustained investor confidence in the Philippine economy.”

“This was partially offset by the valuation effects of a stronger peso, helping reduce the value of external obligations,” it added.

The BTr data used a foreign exchange rate of PHP 55.615 per dollar at end-May, strengthening from PHP 55.933 per dollar at end-April and PHP 58.524 at end-May 2024.

In May, the bulk or 69.6% of the debt stock came from domestic sources, while external obligations made up the rest.

“This reflects the government’s strong bias for domestically sourced financing, which helps mitigate foreign exchange risks and strengthen the local capital market,” the BTr said.

Domestic debt, which was made up of government securities, increased by 1.64% to PHP 11.78 trillion as of end-May from PHP 11.59 trillion as of end-April.

“This increase was mainly due to net issuances totaling PHP 190.87 billion, but it was slightly tempered by the P0.91-billion downward valuation effect of a stronger peso against the US dollar,” it said.

Year on year, domestic borrowings climbed by 12.81% from PHP 10.44 trillion at end-May 2024.

On the other hand, external debt slipped by 0.46% to PHP 5.14 trillion at end-May from PHP 5.16 trillion in the previous month.

The decrease was due to PHP 3.55 billion in net repayments and the strengthening of the peso, which slashed the peso value of foreign debt by PHP 29.35 billion.

“These were partly offset by a PHP 9.14-billion revaluation resulting from third-currency fluctuations against the US dollar,” the BTr said.

Year on year, foreign debt rose by 4.6% from PHP 4.9 trillion at end-May 2024.

External debt securities consisted of PHP 2.26 trillion in US dollar bonds, PHP 239.97 billion in euro bonds, PHP 58.61 billion in Japanese yen bonds, PHP 55.62 billion in Islamic certificates and PHP 54.77 billion in peso global bonds.

Meanwhile, NG-guaranteed obligations inched up by 1.79% to PHP 343.58 billion as of end-May from the end-April level of PHP 337.54 billion.

The BTr attributed the increase to the PHP 6.53-billion net availments of domestic guarantees and the PHP 0.53-billion third-currency revaluation.

“These were partially tempered by the PHP 0.51-billion net repayment of external guarantees and another PHP 0.51-billion reduction from the stronger peso,” it added.

Year on year, guaranteed debt fell by 0.89% from PHP 350.2 billion.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said he expects the debt level to reach new highs in the next few months.

“For the coming months, the outstanding National Government debt could go to new record highs amid new National Government borrowings at the early part of the year and also the need to hedge both local and foreign borrowings of the National Government in view of the Trump factor,” he said.

The Treasury said the debt “remains manageable,” adding that the government is committed to prudent debt management strategy.

Outstanding debt as a share of gross domestic product stood at 62% at the end of the first quarter. 

The NG’s outstanding debt is projected to reach PHP 17.35 trillion by end-2025. — Aubrey Rose A. Inosante

The Philippine Economic Zone Authority (PEZA) saw a 59% increase in approved investment pledges in the first six months of 2025, despite a drop in approvals in June.

In a statement, PEZA said its board approved PHP 72.362 billion worth of investments in the January-to-June period, up 59.1% from the PHP 45.481-billion investment pledges approved in the same period last year.   

“This continued surge in investments affirms PEZA’s role as a vital engine for economic growth and job creation for the country,” PEZA Director-General Tereso O. Panga said in a statement on Wednesday.

“The confidence shown by both new and existing investors is a strong signal that our economic zones (ecozones) are thriving and open for business,” he added.

However, the PEZA board only approved PHP 6.022 billion worth of investments in June, down by 30.4% from PHP 8.654 billion in the same month in 2024.

In June, the PEZA board greenlit 31 new and expansion projects that are expected to bring in USD 166.426 million in export revenues and 3,646 jobs.

Fourteen of the approved projects will be undertaken by export-oriented enterprises, while seven projects are in the information technology and business process management (IT-BPM) sector.

Four projects involve domestic market-oriented enterprises, while four projects are in logistics.

Another project involves ecozone development, while one project involves facility development.

The majority of the projects are expected to be located in Region IV-A or Calabarzon, while the rest will be in Central Luzon, the National Capital Region, Davao Region, Central Visayas, Western Visayas and Ilocos Region.

For the January-to-June period, PEZA approved 133 projects that are expected to generate 32,983 jobs and have USD 1.26 billion in export value.

The majority of these projects are in manufacturing, while 39 are IT-BPM projects, 12 are domestic market-oriented enterprises, 10 are facility development projects, while nine are ecozone developments.

There are four utility projects and another four are in logistics.

“South Koreans come in as the biggest investor for the first half of the year, followed by the Americans, Chinese, Dutch and Japanese,” said PEZA.

“In terms of sectoral investments, manufacturing of food and beverage products tops the list, followed by ecozone development and IT-BPM,” it added.

After the investment performance in the first half, Mr. Panga said he is “optimistic” that PEZA will achieve its targets this year.

This year, PEZA is targeting investment approvals to reach at least PHP 235 billion, and a 5% increase in both actual exports and employment.

“The Philippines is surely in a sweet spot to attract foreign direct investments at this time, and surely, Filipinos and the whole country will reap the results of our combined hard work soon,” Mr. Panga said.

PEZA said it is pursuing 50 investment leads, which it hopes will translate in actual investments.

“PEZA likewise welcomed several high-level inbound delegations during the period representing the US, China, Japan, Spain, Germany, Hong Kong, Taiwan, Singapore, Malaysia, the United Arab Emirates, and even domestic exploratory missions within the Philippines,” PEZA said.

It noted interest in electronics manufacturing and semiconductor manufacturing services, advanced manufacturing activities, aviation, automotive and information technology-business process management sectors. — Justine Irish D. Tabile

The Philippines is still classified as a lower middle-income country after just missing the threshold to achieve upper middle-income country (UMIC) status, according to the World Bank.

The World Bank’s latest country income classification showed the Philippines posted a record gross national income (GNI) per capita of USD 4,470. This was higher than its GNI per capita of USD 4,230 in the previous year.

Despite the increase in GNI per capita, the Philippines remains classified by the World Bank as a lower middle-income country — one with a GNI per capita of USD 1,136 to USD 4,495.

The Philippines’ GNI per capita was only USD 26 shy of the World Bank’s lower GNI per capita requirement of USD 4,496-USD 13,935 to become a UMIC. Last year, the GNI per capita requirement for a UMIC was between USD 4,516 and USD 14,005.

The World Bank computes a country’s GNI through the Atlas method, which serves as the basis of its income classifications — low, lower middle, upper middle and high. GNI refers to the total amount of money earned by its residents both inside and outside its borders.

In Southeast Asia, Vietnam overtook the Philippines in terms of GNI per capita with USD 4,490 but remained a lower middle-income country.

Cambodia (USD 2,520), Laos (USD 2,000), and Myanmar (USD 1,220) are also still classified as lower middle-income countries.

Meanwhile, Malaysia (USD 11,670), Thailand (USD 7,120) and Indonesia (USD 4,910) remained as upper middle-income countries.

Singapore (USD 74,750) and Brunei (USD 36,150) are still considered as high-income countries.

Other notable country movements include Costa Rica which is now classified as a high-income country; and Cabo Verde and Samoa, which both moved up to the UMIC category.

The World Bank updates country classifications by income level on July 1 every year, based on the GNI per capita of the previous calendar year.

Department of Economy, Planning, and Development Secretary Arsenio M. Balisacan in April said the country is still on track to meet its target of moving to the upper middle-income category by 2026.

However, World Bank lead economist for Brunei, Malaysia, the Philippines and Thailand Gonzalo J. Varela has said the country’s transition to UMIC status will likely take a bit longer.

“Getting there with an economy that’s growing a little bit slower than we thought about six months ago will take a little bit longer. So, we are thinking that a probable outcome is that it happens around 2027,” Mr. Varela said at a briefing on June 19.

The World Bank expects the Philippines to grow by 5.3% this year, below the government’s recently revised 5.5% to 6.5% target.

Analysts said the Philippines is unlikely to move to the UMIC category by 2027.

“I’m doubtful we could. Much work needs to be done to improve our competitiveness ranking to attract more investments,” Ateneo Center for Economic Research and Development Director Ser Percival K. Peña-Reyes told BusinessWorld in a Viber message.

The Philippines inched up a spot to 51^st in the 2025 World Competitiveness Yearbook of the International Institute for Management Development. It remained a laggard in the region, ranking 13^th out of 14 Asia-Pacific economies in the index.

Meanwhile, John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies, said it is possible for the Philippines to become an upper middle-income country by 2027, but this would “require stronger, more inclusive and sustained economic growth.”

Mr. Rivera said the government would have to ramp up infrastructure rollout and boost productivity in agriculture and manufacturing.

“Falling short of the UMIC threshold despite a lower benchmark highlights how structural challenges and global headwinds continue to weigh on the Philippines’ income trajectory,” Mr. Rivera said.

He also cited slower-than-expected growth, peso depreciation, and inflation pressures as factors that have hurt the country’s per capita GNI. — Aubrey Rose A. Inosante

Philippine factory activity in June expanded at its fastest pace in two months as production rebounded and new orders rose, S&P Global said.

The S&P Global Philippines Manufacturing Purchasing Managers’ Index (PMI) improved to 50.7 in June from 50.1 in May.

June also marked the third consecutive expansion since the 49.4 reading in March.

A PMI reading above 50 denotes better operating conditions than in the preceding month, while a reading below 50 shows deterioration.

“The overall performance of the Filipino manufacturing sector remained relatively subdued as the first half of the year concluded,” Maryam Baluch, economist at S&P Global Market Intelligence said.

“However, while new orders continue to rise, they do so at a historically muted pace, weighed down by a stalled exports picture,” she added.

Uncertainty over the Trump administration’s tariff policy has weighed on the Philippines and other Southeast Asian countries, which are reliant on exports to the US market.

S&P Global data on the Association of Southeast Asian Nations (ASEAN) showed only two countries reported an expansion in PMI in June, Thailand and the Philippines. Thailand had the highest PMI reading at 51.7, followed by the Philippines (50.7). Both were above the ASEAN average of 48.6.

On the other hand, Malaysia (49.3), Myanmar (49), Vietnam (48.9) and Indonesia (46.9) reported a contraction in manufacturing activity.

In April, US President Donald J. Trump announced a baseline 10% tariff on all its trading partners, as well as higher reciprocal tariffs on some countries. The Philippines was slapped with a 17% tariff, the second lowest among Southeast Asian countries.

While the reciprocal tariffs have been paused for 90 days until July 9, the baseline 10% tariff remains in place.

New orders

In June, S&P Global said Philippine manufacturers reported a further rise in new orders.

“The pace of growth was slightly stronger than that recorded in the previous month, although it remained below the long-run survey average. Anecdotal evidence attributed this latest uptick to successful customer acquisitions, improving underlying demand trends, and effective promotional efforts,” it added.

S&P Global noted that production levels returned to expansion territory, although “only fractionally.” This was a reversal of the marginal contraction seen in May.

“The rate of output growth lagged the increase in incoming new business,” it said.

Manufacturers ramped up purchasing activity in response to better demand.

However, Ms. Baluch noted that delayed delivery times for inputs and material shortages have affected production capacity.

“Delayed delivery times for inputs and material shortages also meant that goods-producing firms in the Philippines were unable to replenish their post-production inventories effectively, reflecting the challenges faced by manufacturers in effectively expanding production amid growing demand,” S&P Global said.

Meanwhile, Philippine manufacturers increased employment for the first time in four months, in response to the increased demand.

S&P Global said inflationary pressures remained historically subdued in June.

“Rates of both input price and output charge inflation were slightly slower than seen in May. Where input prices were raised, this was primarily linked by panelists to higher material costs,” it said.

S&P Global noted that business confidence strengthened compared with May but was still significantly below historical levels.

“The next couple of months will be important to gauge if the sector is able to return to growth rates seen in much of last year,” Ms. Baluch said.

“Lower inflationary pressures and sustained demand will in part help Filipino manufacturers to achieve this through scope for improved pricing power. However, historically muted business confidence suggests a more subdued path for the year ahead.” — A.R.A.Inosante

State spending on infrastructure slumped in April due to the election ban on disbursements for public works projects, the Department of Budget and Management (DBM) said.

In its latest disbursement report on Tuesday, the DBM reported that spending on infrastructure and other capital outlays declined by 27.8% to PHP 85.8 billion in April from PHP 118.9 billion in the same month last year.

“This was due mostly to the muted infrastructure spending of the Department of Public Works and Highways (DPWH), resulting from election-related prohibition on public spending for specific activities, goods, or services, as well as lower volume of contractor billings,” the DBM said.

Government agencies likely frontloaded and accelerated the implementation of infrastructure projects earlier this year, the DBM said.

The Commission on Elections implemented a 45-day ban on the release, disbursement or expenditures of public funds from March 28 to May 11.

The elections were held on May 12.

The DBM also attributed the decline in infrastructure spending to lower direct payments for foreign-assisted rail projects of the Department of Transportation, as well as the releases for local counterpart funds.

These rail projects include the South Commuter Railway Project and the Metro Manila Subway Project.

For the first four months of the year, infrastructure spending rose by 3.6% to PHP 347.6 billion from PHP 335.7 billion in the same period in 2024.

The DBM attributed the increase in infrastructure spending to the “robust spending performance of the DPWH for the implementation of various infrastructure projects, right-of-way settlements, and payment of progress billings (i.e., partially completed works) and accounts payables.”

Meanwhile, overall infrastructure disbursements inched up by 2.4% to PHP 419.4 billion in the January-to-April period from PHP 409.7 billion a year ago.

This includes infrastructure components of subsidy/equity to government corporations and transfers to local government units.

Analysts said infrastructure spending will likely pick up in the next few months.

“We may expect infrastructure spending to continue ramping up to boost the economy both through higher spending and employment in the construction sector, but also better economic activity comes with better infrastructure,” Oikonomia Advisory & Research, Inc. economist Reinielle Matt M. Erece said.

Budget Secretary Amenah F. Pangandaman earlier said infrastructure-related disbursements would likely increase after the election ban ended.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said government spending, particularly on infrastructure, would be a major contributor to overall economic growth.

“Infrastructure spending has been prioritized and increased in recent years to 5%-6% of GDP (gross domestic product), much higher vs. below 2% of GDP about 20-30 years ago,” he said in a Viber message.

For this year, the government’s infrastructure program is set at PHP 1.538 trillion, equivalent to 5.4% of total output.

The Development Budget Coordination Committee earlier said infrastructure spending will be sustained at 5-6% of GDP annually. — Aubrey Rose A. Inosante, Reporter

The government is still planning to source additional borrowings from the domestic market to fund the ballooning budget deficit.

“We’re still finalizing the details of our borrowing program, but we’re still targeting the 80-20 [local to foreign] funding split,” National Treasurer Sharon P. Almanza said in a Viber message.

The government is looking to hike its borrowing program to PHP 2.6 trillion this year from PHP 2.55 trillion previously, to fund the ballooning budget deficit.

The Development Budget Coordination Committee (DBCC) last week raised the budget deficit ceiling for 2025 to P1.561 trillion or 5.5% of gross domestic product (GDP) from 5.3% previously.

The DBCC had lowered this year’s revenue collection target to PHP 4.52 trillion from PHP 4.64 trillion previously. It trimmed the expenditure program for this year to PHP 6.08 trillion from PHP 6.18 trillion previously.

Asked where the government will source the additional borrowing requirements for this year, Finance Secretary Ralph G. Recto said in a text message: “Domestically.”

Gross borrowings by the National Government fell by 6.67% to PHP 1.33 trillion in the first five months of the year as both domestic and external borrowings declined.

External borrowings slumped by 21.54% to PHP 305.94 billion during the period, while domestic borrowings fell by 12.74% to PHP 1.02 trillion.

Reyes Tacandong & Co. Senior Adviser Jonathan L. Ravelas said the move to raise this year’s borrowing plan reflects the government’s need to fund its wider budget deficit.

“There’s definitely room for large issuances, especially retail Treasury bonds, which have historically been effective in tapping domestic liquidity and broadening investor participation. However, market volatility — driven by global uncertainties and shifting interest rate expectations — could affect pricing and demand,” Mr. Ravelas said.

A trader said in a text message that yields for the coming auctions of government securities are not expected to drop drastically as the increase in the government’s borrowing program is expected.

The trader added the government will have to issue a large volume, possibly through retail bonds, to meet the higher borrowing target.

“There is still space for large retail bond offerings, especially with strong demand from local investors seeking safe returns in a moderating interest rate environment,” Philippine Institute for Development Studies Senior Research Fellow John Paolo R. Rivera likewise said in a Viber message.

Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message that there was still space for large retail issuances amid “ample” liquidity, but market volatility could push yields higher.

Mr. Rivera also said market volatility stemming from global rate uncertainty, geopolitical tensions, and inflation risks could affect pricing and dampen investor appetite.

“The BTr (Bureau of the Treasury)will need to be strategic with timing, tenor, and incentives to manage costs and ensure successful take-up,” he said.

Mr. Rivera added the BTr could still tap into the foreign bond market as a “mix of strategies” could be used to meet the borrowing requirement.

BTr’s Ms. Almanza previously said the government is unlikely to issue another global bond this year as its foreign borrowing program is almost completed.

In January, the government raised USD 3.29 billion from its sale of US dollar and euro bonds.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message that “large” maturing Treasury bonds from August 2025-September 2025 will also drive the government to increase borrowings.

The government is looking to raise PHP 690 billion from the domestic market in the third quarter or PHP 325 billion via Treasury bills and PHP 365 billion through Treasury bonds. — Aaron Michael C. Sy