Hitting a fresh high, the national government’s debt level is expected to exceed ₱19 trillion by the end of 2026, nearly 10-percent higher than the projected end-2025 level of ₱17.36 trillion.

According to the Budget of Expenditures and Sources of Financing (BESF) document for fiscal year (FY) 2026 published on Wednesday, Aug. 13, the national government’s total debt will pile up by ₱1.71 trillion or 9.8 percent to ₱19.06 trillion by next year.

The domestic debt stock is expected to increase by 10.3 percent to ₱13.28 trillion by the end of 2026 from ₱12.04 trillion by end-2025. Meanwhile, outstanding foreign borrowings are projected to grow by 8.9 percent to ₱5.78 trillion from ₱5.31 trillion.

Overall, 69.7 percent of next year’s outstanding debt will be sourced domestically, while 30.3 percent will come from foreign lenders.

Next year’s debt level will remain “manageable,” Budget Secretary Amenah F. Pangandaman told reporters on the sidelines of the turnover of the FY 2026 National Expenditure Program (NEP) for congressional deliberations.

Pangandaman noted that it remains consistent with the government’s medium-term fiscal framework (MTFF).

Measured against the country’s economic output, the national government’s debt next year is expected to reach 61.8 percent of gross domestic product (GDP), slightly higher than this year’s 61.3 percent debt-to-GDP ratio. In nominal terms, the government projects GDP to be valued at ₱28.36 trillion this year, ₱30.85 trillion in 2026, ₱33.46 trillion in 2027, and ₱36.3 trillion in 2028.

Despite the uptick in 2026, the debt ratio is forecast to ease to 61.3 percent in 2027 and further to 60.3 percent in 2028—putting it within the Marcos Jr. administration’s target of around 60 percent.

Relative to both emerging and advanced regional peers, Department of Budget and Management (DBM) Assistant Secretary Romeo Matthew T. Balanquit said the Philippines is “not lagging” in terms of the current debt-to-GDP ratio performance.

Balanquit presented comparative data showing the Philippines’ debt ratio is lower than Malaysia’s 70.4 percent, Singapore’s 173.1 percent, and Thailand’s 63.7 percent. It is also below the levels of developed countries, such as Japan’s 236.7 percent, the United States’ (US) 124.3 percent, China’s 88.3 percent, and Germany’s 62.5 percent.

For 2026 alone, gross borrowings will hit ₱2.68 trillion, up by 3.1 percent from ₱2.6 trillion by end-2025.

Notably, expected borrowings from external lenders will jump by nearly a third, or 28.5 percent, from the programmed ₱488.2 billion this year to ₱627.1 billion. This comes as planned offshore commercial borrowings next year will be higher at ₱302.1 billion, compared with ₱187.2 billion this year.

Apart from that, loans to fund the government’s programs will increase to ₱263.3 billion, up by 16.1 percent from ₱226.7 billion. On the other hand, loans to fund the administration’s projects will drop by 16.8 percent to ₱61.7 billion from ₱74.2 billion.

Meanwhile, borrowings from domestic lenders will drop by 2.8 percent to ₱2.05 trillion from ₱2.11 trillion this year.

Fixed-rate treasury bonds (T-bonds), which account for the bulk of the total domestic debt, will inch down by three percent to ₱1.99 trillion from ₱2.05 trillion this year. Debt via the sale of short-dated treasury bills (T-bills) will inch up to a gross of ₱791.1 billion next year from ₱731.1 billion.

Next year’s borrowing mix will be 77:23, meaning 77 percent of debt will be sourced domestically while 23 percent will come from external sources. This marks a shift from this year’s 81:19 borrowing mix.

Borrowings will partly finance a budget deficit of ₱1.65 trillion next year, higher in value than this year’s ₱1.56-trillion program, but smaller in share to GDP at 5.3 percent next year versus 5.5 percent this year.

Debt payments are expected to slightly decline by 2.4 percent to over ₱2 trillion in 2026 from the record ₱2.05 trillion in 2025.

This anticipated drop is attributed to a 12.4-percent decrease in principal payments or amortization to ₱1.06 trillion from ₱1.21 trillion this year.

Domestic payments are projected at ₱889.3 billion in 2026, down by 9.9 percent from ₱987.1 billion this year. Similarly, payments to foreign creditors will plummet by 24.1 percent to ₱166.3 billion from ₱219.1 billion in 2025.

On the other hand, both domestic and offshore lenders will receive higher interest payments from the Marcos Jr. administration next year.

This year’s ₱848 billion in interest payments will increase by 12 percent to ₱950 billion next year. Broken down, payments to domestic lenders will rise by 14.4 percent to ₱707.5 billion from ₱618.3 billion, while interest payments to offshore lenders will grow by 5.5 percent to ₱242.5 billion from ₱229.8 billion this year.