PH debt reaches record P16.63 trillion in Feb 2025

The Philippines’ sovereign debt soared to a new record high as of February 2025, reflecting the government’s ongoing borrowing efforts to fund socioeconomic and infrastructure initiatives, according to data released by the Bureau of the Treasury on Tuesday.

The national government's outstanding debt stood at P16.63 trillion at the end of February, marking a 1.96% increase from P16.31 trillion in January 2025.

According to the Treasury, the increase was primarily driven by the net issuance of new domestic and external debt to support public programs and projects.

Michael Ricafort, chief economist at Rizal Commercial Banking Corp., attributed the rising debt stock to the continued fiscal deficit, which necessitates more borrowing to finance government expenditures exceeding revenues.

The increase in sovereign debt was partially tempered by the peso's appreciation against the US dollar, strengthening to P57.99:$1 from P58.375:$1 month-on-month.

Domestic, foreign breakdown

The Philippines' debt remains predominantly domestic, accounting for 67.5% of the total, while foreign obligations make up 32.5%. The Treasury emphasized that this financing mix helps mitigate external risks while leveraging the country’s liquid domestic market.

Domestic debt reached P11.22 trillion, up 1.26% from P11.08 trillion in January. 

This was mainly due to P140.72 billion in net domestic financing, as gross government securities issuance of P268.25 billion outweighed redemptions of P127.53 billion. 

The peso's appreciation helped reduce the overall domestic debt valuation by P1.10 billion.

Foreign debt increased by 3.44% to P5.41 trillion from P5.23 trillion in January. 

This was driven by net foreign borrowing of P193.71 billion and a P20.41 billion appreciation effect on third currency-denominated debt. 

However, a P34.48 billion reduction due to peso appreciation against the US dollar offset part of this increase.

In February, the government secured P197.30 billion in external financing, including:

• P190.82 billion from a triple-tranche global bond issuance: 10- and 25-year US dollar bonds ($2.25 billion) and 25-year Euro bonds (€1.0 billion).
• P6.48 billion in project loans, allocated for:
• Rail projects through Japan International Cooperation Agency (P3.86 billion)
• Physical connectivity and health sector projects with the Asian Development Bank (P1.71 billion)
• Agricultural and health sector programs with the International Bank for Reconstruction and Development (P0.91 billion)

Sustainability

Despite the rise in debt levels, the BTr maintained that sovereign debt remains manageable, with the debt-to-GDP ratio at 60.7% as of the end of 2024—slightly above the internationally accepted threshold of 60%.

“To ensure sustainable debt management and bring the debt-to-GDP ratio below 60%, tax and fiscal reform measures are necessary to narrow the budget deficit,” Ricafort said. 

A lower debt-to-GDP ratio indicates the country's ability to repay its debt without negatively impacting the economy.

Finance Secretary Ralph Recto previously projected that the country’s sovereign debt could reach P20 trillion by the end of President Ferdinand "Bongbong" Marcos Jr.'s term in 2028. 

However, Recto expressed confidence that economic growth would outpace debt accumulation, with the economy expected to reach P37 trillion by 2028 against a projected debt stock of P20 trillion. — DVM, GMA Integrated News