ECONOMY

The Philippines’ outstanding sovereign debt stock reached a new record high of ₱16.92 trillion as of end-May 2025, according to data released by the Bureau of the Treasury (BTr) on Thursday, July 3. This increase reflects the government’s ongoing capital-raising efforts to meet its budgetary requirements.

The national government’s debt saw a 0.99% increase from the ₱16.75 trillion recorded at the end of April. The BTr attributed this “minimal increase” primarily to “successful net issuances of new domestic securities, which reflect sustained investor confidence in the Philippine economy.” This was partially offset by the strengthening of the Philippine peso, which reduced the value of external obligations.

The country’s debt profile as of end-May was predominantly composed of domestic borrowings, accounting for 69.6% of the total, while foreign obligations made up the remaining 30.4%. This composition, according to the BTr, “reflects the government’s strong bias for domestically sourced financing, which helps mitigate foreign exchange risks and strengthen the local capital market.” The Treasury also reaffirmed the government’s commitment to a “prudent debt management strategy,” ensuring borrowings align with fiscal objectives and macroeconomic stability.

A closer look at the figures shows domestic debt amounted to ₱11.78 trillion as of end-May, a 1.64% increase from ₱11.59 trillion in April. This rise was mainly due to net issuances totaling ₱190.87 billion, though slightly tempered by a ₱0.91 billion downward valuation effect from the stronger peso against the US dollar. Conversely, foreign debt decreased by 0.46% to ₱5.14 trillion from ₱5.16 trillion month-on-month. This decline was driven by ₱3.55 billion in net repayments and the peso’s appreciation, which reduced the peso value of foreign debt by ₱29.35 billion. These reductions were partially offset by a ₱9.14 billion revaluation due to third-currency fluctuations against the US dollar.

Government-guaranteed debt also saw an increase of 1.8% to ₱343.6 billion as of end-May 2025, driven by ₱6.5 billion in new domestic guarantees and a ₱530 million adjustment from third-currency exchange rate changes.

Regarding the overall debt level, Department of Finance (DOF) Secretary Ralph G. Recto, the administration’s chief economic manager, has previously allayed concerns. When asked about the rising nominal debt, he told the Manila Bulletin that “Credit rating agencies have upgraded us. They’re not worried.” The Philippines currently holds investment-grade credit ratings from major debt watchers: Fitch Ratings, Moody’s Ratings, and S&P Global Ratings.

As of the end of the first quarter of 2025, the country’s debt-to-gross domestic product (GDP) ratio climbed to 62%, the highest since the previous administration’s increased borrowings during the COVID-19 pandemic. The Marcos Jr. administration aims to reduce this debt-to-GDP ratio to below 60% by the end of the President’s term in 2028. Prior to the pandemic, the public debt ratio had reached a record low of 39.6% in 2019.