Philippine government debt, repayments soar
At A Glance
- The Philippines is facing not only a ballooning public debt but also rising repayment expenditures as a share of economic output, at a time when world trade uncertainties are putting pressure on global debt accumulation.
The Philippines is facing not only a ballooning public debt but also rising repayment expenditures as a share of economic output, at a time when world trade uncertainties are putting pressure on global debt accumulation.
The latest Global Debt Monitor report of the Washington-based Institute of International Finance (IIF), released on May 6, showed that as of the first quarter of 2025, Philippine government debt rose to 57.3 percent of gross domestic product (GDP), from 56.7 percent a year ago.
The higher public debt ratio bucked the downward trend across private-sector debts in the Philippines.
IIF data showed that Filipino households' debt as a share of GDP declined to 11.4 percent as of end-March this year, from 12.4 percent a year earlier.
Non-financial corporates' debt-to-GDP ratio dropped to 25.7 percent at end-March, from 27.2 percent in the first quarter of 2024.
As for the financial sector, its debt level stayed at 7.2 percent of GDP in the first quarter of both this year and last year.
In a separate April 3 report obtained by Manila Bulletin, IIF data covering lower middle-income countries (LMICs) showed that from 2022 to 2024, the Philippines' debt servicing budget averaged 6.2 percent of GDP.
Amortization or principal repayments as a share of Philippine GDP reached 3.8 percent, while interest payments stood at 2.4 percent.
IIF data showed that the Philippines' debt payments exceeded the budgets for more important sectors like education (an average of 3.6 percent of GDP from 2022 to 2024), health (1.2 percent of GDP), and the military (1.1 percent of GDP).
The Philippines will repay a record ₱2.05 trillion in debt this year, up from ₱2.02 trillion last year.
The national government will settle over ₱1.2 trillion in principal amortization in 2025, on top of more than ₱848 billion in interest.
The IIF cited the Philippines as among the countries that have experienced both rising interest costs and falling social expenditures during the period 2018 to 2024.
"With protectionism on the rise and increasingly weighing on the outlook for global trade and capital flows, the reliance of LMICs on domestic funding is likely to increase further in the short to medium term," the IIF noted.
The government plans to borrow a gross amount of ₱2.55 trillion this year, of which the bulk—amounting to ₱2.04 trillion—will be sourced from domestic creditors, mainly through the issuance of short-dated T-bills and fixed-rate treasury bonds.
The Philippines sources about four-fifths of its annual borrowings from the local debt market—which remains awash in cash—to temper foreign exchange (forex) risks.
By end-2025, the national government's outstanding debt has been programmed to climb to a record ₱17.35 trillion.
Across emerging markets (EMs) like the Philippines, total debt jumped to a new record high of over $106 trillion in the first quarter of 2025, jacking up the EM debt-to-GDP ratio to an also all-time high of 245 percent.
"The increase was largely driven by China, which alone accounted for over $2 trillion of the rise. China's government debt has surged in recent years, rising from 60 percent of GDP in 2019 to over 93 percent at present," the IIF explained.
Total global debt likewise hit a new high of more than $324 trillion, partly as the greenback's weakness hiked its value in United States (US) dollar terms.
"As a share of GDP, global debt continued to edge down—albeit marginally—and currently stands near 325 percent. This modest decline was driven by mature markets," the IIF said.