The Department of Finance (DOF) said the Marcos administration has been prudently managing the Philippines’ swollen debt stock, which was bloated by the ₱6.84 trillion added by the Duterte regime during the Covid-19 pandemic.

In a statement released on Thursday, June 5, the DOF said the national government “continues to manage the large debt it has inherited from the previous administration by growing the economy faster.”

Efforts contributing to this debt management, the DOF said, have brought down the country’s debt to a “sustainable level” and below the 70-percent international threshold for the debt-to-gross domestic product (GDP) ratio.

Reports from the DOF showed that the Duterte administration left ₱12.79 trillion in debt. From this total, the current government’s outstanding debt continued to increase, reaching ₱16.75 trillion as of end-April.

Comparatively, the ₱6.84 trillion in debt accumulated under the previous administration exceeded the total borrowings of all past presidents from Ferdinand Marcos Sr. to Benigno Aquino III, the DOF noted.

The DOF argued that “despite inheriting the larger debt stock,” the current government has already trimmed the country’s debt-to-GDP ratio to 60.7 percent last year. The government aims to reduce this further to below 60 percent by the end of the Marcos administration in 2028.

The DOF is confident the government can meet this target, citing the rapid growth of the economy, which it said is outpacing the increase in debt. It projects the country’s GDP to reach ₱36.8 trillion by 2028.

As of end-April, domestic debt accounted for 69.2 percent of the country’s total debt, while foreign debt comprised 30.8 percent. This fell short of the desired 80:20 borrowing mix—80 percent sourced locally, and 20 percent from foreign lenders.

The adoption of this mix, the DOF said, supports the development of local capital markets and helps mitigate foreign exchange risks.

“Since a large chunk of the borrowing remains local, this means that the interest payments are being circulated back into the economy,” the DOF said.

“Tax collections continue to post double-digit increases,” it added, noting that this allows the government to fund priority projects “without imposing new taxes on the people and keeping debt growth well within sustainable levels.”

Tax collections climbed by 11.5 percent to ₱1.43 trillion in the first four months of the year, outpacing the 7.6-percent nominal GDP growth in the first quarter—an indication of improving fiscal sustainability, according to the DOF.

The Bureau of Internal Revenue (BIR), the country’s largest tax agency, collected ₱1.11 trillion as of end-April, a 14.5-percent increase from the same period last year.

Meanwhile, the Bureau of Customs (BOC), the second-largest tax agency, collected ₱306.1 billion, up 2.2 percent year-on-year.

The country’s fiscal deficit narrowed to 5.7 percent of GDP in 2024. The DOF said this is projected to decline further to around 3.8 percent by 2028.

It also noted that the government’s “strict” commitment to fiscal discipline recently led to a credit rating upgrade to A- from Japan’s Rating and Investment Information Inc. (R&I), along with a positive outlook from S&P Global.

“Securing a credit rating upgrade and affirmation signals high investor confidence in the Philippines’ economic performance, increasing investor interest in Philippine bonds and resulting in lower borrowing costs for the government,” the DOF said.

It added that these borrowings are being reinvested into high-impact sectors such as infrastructure, education, agriculture, health, and social services, which are expected to generate jobs and stimulate further growth.