The Philippine government is focused on managing its substantial inherited debt by accelerating economic growth, aiming to bring borrowings down to a sustainable level and below the international threshold of 70 percent of gross domestic product (GDP), the Department of Finance (DOF) said Thursday.
Finance Secretary Ralph Recto said the Marcos Jr. administration inherited a significant P12.79 trillion in debt when it took office in 2022.
As of end-April 2025, the national government’s total outstanding debt stood at P16.75 trillion, which the DOF noted is relatively lower than most other Asian countries based on available data. For comparison, Japan’s total debt is P485.94 trillion, Singapore’s is P53.68 trillion, South Korea’s is P46.89 trillion, Indonesia’s is P31.37 trillion and Thailand’s is P17.73 trillion.
Recto said the Duterte administration added P6.84 trillion in debt due to the pandemic, surpassing the combined borrowings of all previous administrations: Ferdinand Marcos Sr. (P365 billion); Corazon Aquino (P372 billion); Fidel Ramos (P681 billion); Joseph Estrada (P766 billion); Gloria Macapagal Arroyo (P2.40 trillion); and Benigno Aquino III (P1.37 trillion).
Despite the inherited debt, the DOF has improved the country’s debt statistics, reducing the national government’s debt-to-GDP ratio to 60.7 percent in 2024 through a prudent debt management strategy. With the economy projected to grow to about P36.8 trillion by 2028, faster than its obligations, the government remains on track to reduce the debt-to-GDP ratio to below 60 percent by the end of President Marcos Jr.’s term.
As of end-April 2025, domestic debt continued to comprise the majority of the total debt stock at 69.2 percent, with external obligations accounting for 30.8 percent. The DOF noted that a large portion of borrowing remaining local ensures that interest payments are circulated back into the economy.
Under Secretary Recto’s leadership, the Bureau of the Treasury (BTr) is adopting an 80:20 borrowing mix strategy in favor of domestic sources. This approach aims to support the development of local capital markets and mitigate foreign exchange risks.
About 91.5 percent of the government’s borrowing consists of fixed interest rates, shielding the country from sudden increases in interest and exchange rates. About 81.3 percent of the country’s borrowings have long-term repayment periods, providing ample fiscal space for the government to allocate funds towards economic growth initiatives.
The DOF’s intensified tax administration efforts have led to double-digit increases in tax collections, allowing the government to fund priority programs and projects without imposing new taxes and keeping debt growth sustainable.
For the first four months of the year, tax collections grew by 11.49 percent to P1.43 trillion, exceeding the nominal GDP growth of 7.6 percent for the first quarter. This indicates fiscal sustainability and puts the government on track to meet its collection targets for 2025.
The Bureau of Internal Revenue (BIR) collected P1.11 trillion as of end-April, 14.50 percent higher compared to the same period last year. Meanwhile, the Bureau of Customs’ (BOC) overall collection for the four-month period reached P306.1 billion, exceeding last year’s performance by 2.16 percent.
The country’s fiscal deficit has also been steadily narrowing, dropping to 5.7 percent of GDP in 2024, a significant improvement from the pandemic peak of 8.6 percent in 2021, 7.3 percent in 2022, and 6.2 percent in 2023. This is projected to decline further to about 3.8 percent by 2028.
The government’s strict adherence to fiscal discipline has recently earned it a credit rating upgrade of A- from Japan’s Rating and Investment Information Inc. (R&I) and an outlook upgrade to positive from S&P Global. These upgrades signal high investor confidence in the Philippines’ economic performance, increasing interest in Philippine bonds and resulting in lower borrowing costs for the government.
These borrowings are then reinvested into the economy through growth-enhancing investments in areas such as infrastructure, education, agriculture, health, and social services, which are expected to create more jobs for Filipinos.
