THE country’s general government’s (GG) debt as a share of gross domestic product (GDP) rose to 56.8 percent by the end of 2025, Finance Secretary Frederick D. Go told lawmakers last Monday.
That GG debt-to-GDP ratio level is higher than the 53.9 percent recorded by the end of 2024, when GG debt hit P14.248 trillion, Department of Finance (DOF) data showed.
The GG debt includes national government (NG) with bond sinking fund (BSF), social security Institutions and local government units (LGUs) less intrasector debt holdings.
Nonetheless, Go told congressmen during the Development Budget Coordination Committee’s briefing that the country’s debt levels ‘remain sustainable’ and is ‘within a manageable range compared to other emerging economies.’ He didn’t cite which emerging economy he is referring to.
The ratio is below the 70 percent threshold set by the International Monetary Fund-World Bank (IMF-WB) for Debt Sustainability for emerging market and middle-income economies, according to Go.
The ratio is projected to increase to 60.2 percent this year and decline gradually to 59.9 percent in 2027 and 59.2 percent in 2028, based on the IMF’s latest ‘Fiscal Monitor’ report.
Meanwhile, the NG debt-to-GDP ratio settled at 63.2 percent in end-2025.
Despite this, the level rose to a 22-year-high of 66 percent in the second quarter this year, the highest since 2004, according to the latest Treasury data.
Go said finance officials ‘have maintained a prudent debt mix, predominantly domestic debt, predominantly carrying fixed interest rates, and predominantly structured with long repayment terms.’
Broken down, 68.4 percent of the NG’s debt is sourced from domestic lenders while 31.6 percent has been sourced externally, including commercial bonds and official development assistance.
The mix, according to Go, ‘reduces our exposure to foreign exchange risks, while also supporting the continued development of our local capital market.’
About 90 percent of the government’s debt also carries fixed interest rates, providing certainty in debt servicing costs and shielding it from sudden increases or fluctuations in global interest rates, Go added.
Most, or 84.1 percent, of the government’s debt also has long-term repayment periods.
‘This longer maturity profile reduces our refinancing risks and gives us greater predictability in managing our debt obligations,’ Go told lawmakers.
For 2027, the government will allocate P1.143 trillion for debt servicing, covering interest payments on outstanding obligations and net lending to government corporations, among others. This is higher by 17.3 percent from this year’s P974 billion allotment.
‘A higher interest bill does not by itself mean that our debt has become unmanageable. Our debt remains manageable,’ Budget Secretary Kim Robert C. De Leon echoed Go during the same briefing.
‘We are pursuing a strategic and gradual fiscal consolidation path that allows us to honor our obligations, maintain fiscal credibility, and continue investing in our people and our economy,’ De Leon added.