Just past midyear, the national government’s outstanding debt hit a fresh high of ₱17.56 trillion, surpassing the economic managers’ projected year-end level of ₱17.36 trillion.

The latest data from the Bureau of the Treasury (BTr) released on Wednesday night, Sept. 3, showed that the country’s debt as of end-July swelled by 12 percent from ₱15.69 trillion in the same period last year, and was ₱200-billion higher than the forecast end-2025 debt level.

Even with this trend, breaching ₱18 trillion by year-end remains out of sight, as Finance Secretary Ralph G. Recto maintained that the national government’s debt will settle at the programmed level.

“Debt by year-end will be equal, if not lower, than the planned ₱17.36 trillion,” Recto told Manila Bulletin on Thursday, Sept. 4.

National Treasurer Sharon P. Almanza told Manila Bulletin that the double-digit increase in debt stock was due to borrowings to finance the country’s budget deficit and the revaluation of foreign exchange (forex) debt.

The government is targeting to bring the country’s fiscal deficit down to 5.5 percent of gross domestic product (GDP) in 2025 from 5.7 percent last year.

End-July domestic debt reached ₱12.11 trillion, up 12.6 percent from ₱10.75 trillion a year earlier. It also stood 0.58-percent, or ₱70-billion, above the projected level of ₱12.04 trillion by the end of 2025.

Meanwhile, foreign debt climbed 10.5 percent to ₱5.46 trillion from ₱4.94 trillion in July 2024, exceeding the end-2025 forecast of ₱5.31 trillion by 2.8 percent.

This brought the country’s financing mix for the first seven months of the year to 76-percent domestic and 24-percent external borrowing.

Almanza noted that this increase is “only transitory since the bulk of our domestic maturity is in the latter part of the third quarter.”

In a statement, the BTr said it expects the national government’s debt to ease by year-end as it settles ₱814.2 billion in borrowings from domestic lenders and winds down its borrowing activities.

Proceeds of these government borrowings fund major infrastructure and development programs in “education, healthcare, agriculture, and social services, among other priorities of the Marcos Jr. administration.”

For Rizal Commercial Banking Corp. (RCBC) chief economist Michael Ricafort, breaching the ₱18-trillion mark by year-end is “possible” should the government fail to curb the pace of increases in year-to-date borrowings.

“[Public debt] could possibly breach ₱18 trillion by end-2025 at the rate of the year-to-date increase if not curbed through narrower budget deficits in the coming months,” Ricafort said.

“It could still go up to new record highs due to continued budget deficits in the coming months,” the economist added, but agreed with Almanza that paying off “some large maturing national government debt” could “potentially reduce or at least mitigate” any further rise in the debt pile.

Meanwhile, John Paolo Rivera, senior research fellow at state policy think tank Philippine Institute for Development Studies (PIDS), said the current level is a “cause for concern.”

“While the BTr expects a decline by year-end due to scheduled bond maturities and potential revenue gains, the risk of breaching is not negligible especially if fiscal pressures mount due to slower growth, weaker revenues, or additional spending needs,” Rivera said.

“Unless fiscal consolidation efforts accelerate and revenue-raising measures gain traction, hitting the ₱18-trillion mark this year remains a plausible scenario,” he noted, adding that wasted funds from ghost infrastructure projects are also worsening the concern.

As such, Rivera urged the government to come up with a clear plan for refinancing maturities, rationalizing spending, and bringing debt back to sustainable levels.

For 2025 alone, the Marcos administration’s gross borrowings slipped slightly to ₱1.757 trillion in the first seven months of the year, driven by a decline in domestic loans despite a more than 50-percent increase in foreign debt.

End-July gross borrowings stood 0.1-percent lower than the ₱1.759 trillion recorded in the same period a year earlier.

During the seven-month period, gross borrowings accounted for 68.9 percent of the government’s planned total borrowings of ₱2.55 trillion for the year.

Based on the Budget of Expenditures and Sources of Financing (BESF) document for fiscal year (FY) 2026, the 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.

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.

To ensure prudent debt management, the Marcos Jr. administration maintains its commitment to “leveraging strong investor confidence in peso-denominated securities while ensuring that borrowings are at the lowest possible cost,” the BTr said.