Reversing its record high of ₱17.56 trillion in July, the national government’s outstanding debt shrank to ₱17.47 trillion in August, due to settlement of over half a trillion pesos in local bonds and stronger peso.

Given this development, Finance Secretary Ralph G. Recto and National Treasurer Sharon P. Almanza expressed confidence in still hitting the end-2025 debt target of ₱17.36 trillion.

“We will hit our targets this year,” Recto told Manila Bulletin on Tuesday, Sept. 30. He earlier said that the debt stock will settle at the programmed level despite breaching it just past midyear.

Almanza also told Manila Bulletin that the government’s forecast remains “within” the revised medium-term fiscal framework (MTFF) target. “Any huge deviations may be affected by [forex] valuation.”

According to the latest data from the Bureau of the Treasury (BTr) released on Tuesday, Sept. 30, the country’s debt as of end-August eased by 0.5 percent from the previous month.

“This was mainly due to the government’s full repayment of its biggest local bond for the year, worth ₱516.3 billion, and a stronger peso, which reduced the value of the country’s external debt,” the Treasury said in a Sept. 30 statement.

In particular, the foreign exchange (forex) rate used to quantify the outstanding debt level was ₱57.042:$1, compared with ₱58.186:$1 used in July.

However, the end-August level remains ₱110 billion higher than the forecast end-2025 debt level. Compared to last year’s debt stock, the end-August figure stood 12.3 percent higher than ₱15.55 trillion.

According to the Treasury, the easing of government debt also coincided with a more favorable borrowing mix, as the share of domestic borrowings increased to 69.2 percent from 68.9 percent the previous month.

“This indicates a generally more favorable debt position, given that domestic debt is less vulnerable to shifts in foreign exchange movements,” the BTr said.

“In addition, domestic borrowing is largely owed to Filipinos themselves, providing a safe and secure investment vehicle for wealth growth while also ensuring that the money circulates back into the local economy,” it added.

For this year, the government is targeting an 80:20 financing mix—80 percent sourced domestically and 20 percent externally.

Domestic debt fell slightly by ₱21.4 billion to ₱12.09 trillion in August from ₱12.11 trillion in July. Almost the entire amount came from government debt securities, with only ₱156 million from loans.

Similarly, foreign debt declined by ₱73.68 billion, or 1.5 percent, to ₱5.38 trillion from ₱5.46 trillion in July.

Since January, the national government has raised ₱1.84 trillion in gross domestic borrowing, including the issuance of retail treasury bond tranche 31 (RTB-31).

“This demonstrates strong investor confidence in government securities as an inclusive and high-quality investment option for Filipinos,” the BTr said.

Meanwhile, foreign borrowings increased by 50.9 percent to ₱426.2 billion from January to August, compared to ₱282.5 billion in the same period a year earlier.

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.