The Philippine government’s outstanding debt is expected to surpass P21 trillion next year amid the depreciation of the peso, according to the Department of Budget and Management (DBM).
At the same time, the Marcos administration raised its borrowing to P3.3 trillion instead of P2.73 trillion.
Data from the latest Budget of Expenditures and Sources of Financing (BESF) released yesterday showed that the debt stock is projected to rise by 8.7 percent to P21.48 trillion by end-2027, up from the revised P19.77 trillion this year.
Of the projected debt next year, P14.28 trillion will be sourced from domestic creditors, while P7.2 trillion will come from external sources.
Budget Assistant Secretary Romeo Matthew Balanquit said that foreign exchange (forex) movements and the slowdown in the fiscal consolidation program would pad the government’s outstanding debt next year.
‘So many of our loans were contracted during the pandemic. During that time, forex was just around P49.60 to a dollar. Now, it’s around P60. With that, we can say the peso has depreciated by almost 20 percent. That led us to incur higher costs,’ Balanquit told reporters.
Data from the Bureau of the Treasury showed that the government’s debt amounted to P19.07 trillion as of end-June, equivalent to 66 percent of gross domestic product, the highest debt-to-GDP ratio in 22 years.
The June debt stock was already equivalent to 96.5 percent of the government’s full-year 2026 projection.
‘Our old loans were contracted at a lower interest rate. Now they are maturing. So we have to refinance using new loans. But worse because this will be at a higher interest rate,’ he said.
The government expects its debt-to-GDP ratio to settle at 64.9 percent this year before easing to 64.4 percent in 2027, 64.2 percent in 2028, 64 percent in 2029 and 63 percent in 2030.
Balanquit said the debt level remains below the 70 percent debt-to-GDP benchmark used by the International Monetary Fund.
Meanwhile, general government debt is projected to decline to 58.4 percent of GDP in 2027 from 58.7 percent in 2026, before falling to 58.3 percent in 2028, 57.8 percent in 2029 and 56.4 percent in 2030.
‘It’s not bad debts because you are able to make use of this money for something productive and for long-term investment like infrastructure. We are not borrowing for aid. We are borrowing for program loans, project loans, official development assistance. These are mainly for infrastructure projects,’ he said.
The government’s decision to accommodate a higher deficit trajectory also contributed to the increase in borrowing requirements, he said.
The Philippines sees its budget deficit-to-GDP ratio improving to 5.1 percent 2027, 4.8 percent in 2028 and 4.2 percent in 2029.
Meanwhile, the government plans to borrow P3.3 trillion next year, nearly 21 percent higher than this year’s revised P2.73 trillion borrowing plan.
Of next year’s borrowing, P2.39 trillion will come from domestic sources and P915 billion from foreign creditors.
Gross borrowing is also projected to rise further to P3.65 trillion in 2028 and P3.55 trillion in 2029.
Higher debt levels will also push up debt servicing costs, as debt service bill is seen rising to P2.7 trillion in 2027, a 32.2-percent increase from P2.05 trillion this year.
The government said it would allocate P1.6 trillion on principal amortization and P1.11 trillion for interest payments next year.