The Philippines' debt-to-gross domestic product (GDP) ratio has climbed to 66% in the second quarter of 2026, marking the highest level since 2004. This increase is attributed to a combination of rising national debt and sluggish economic growth.
Debt Levels and Economic Context
Data from the Bureau of Treasury indicates that the National Government's outstanding debt rose by 2.8% to P19.07 trillion at the end of June, up from P18.55 trillion at the end of May. This uptick in debt coincides with a slower GDP growth rate of 2.3%, down from 5.4% in the same quarter last year.
The increase reflects not only the government’s financing requirements but also the slower pace of economic growth.
Ruben Carlo O. Asuncion, Chief Economist, Union Bank of the Philippines
The economic growth rate of 2.3% is the slowest since early 2021, and outside of the pandemic years, the weakest growth in over 16 years. This has raised concerns about fiscal sustainability.
Economists are warning that the current debt levels require careful management. Ruben Carlo O. Asuncion noted, "The latest debt ratio suggests that fiscal space is becoming more constrained," indicating a need for policymakers to balance growth-supportive spending with fiscal consolidation.
Domestic debt constituted 67.3% of the total debt stock, with external debt rising as well. While the debt-to-GDP ratio is concerning, Asuncion emphasized that it remains manageable if economic growth can be restored.
Jonathan L. Ravelas, Senior Adviser at Reyes Tacandong & Co., highlighted that rising debt is evolving into a growth issue. He stated, "Without a credible plan to expand revenues... the burden of today’s debt will increasingly be passed on to future generations."
The government's projections indicate hopes for a decline in the debt-to-GDP ratio to between 60%-63% by 2026, but economic recovery is essential for achieving these targets.