The Washington-based multilateral lender International Monetary Fund (IMF) sees the narrowing of Philippine debt relative to the size of the economy being delayed until it reaches 60 percent, with the proposed revenue-generating general tax amnesty (GTA) among the measures seen as offering limited help.

Based on the IMF’s latest report, national government debt is projected to post a gradual decline to “about 60 percent” of gross domestic product (GDP) by 2030—two years beyond the Marcos Jr. administration—driven by faster economic expansion than borrowing costs.

Slower growth in borrowing costs allows the government to manage and reduce its obligations relative to GDP.

It can be noted that the multilateral lender’s projections still stand higher than the government’s forecast, as indicated in the updated medium-term fiscal framework (MTFF), covering fiscal years (FYs) 2022 to 2030.

According to the MTFF, the government projects the debt-to-GDP ratio to eventually fall to 60.3 percent in 2028, 59.5 percent in 2029, and 25 percent in 2030. The Philippines closed 2024 with the ratio standing at 60.7 percent.

Under the IMF’s assessment framework, meanwhile, it noted that the Philippines’ debt position remains stable, with a low risk that the government will face serious financial or debt repayment problems.

“With no new tax policy measures, staff’s baseline projections for 2027 to 2028 assume the consolidation will be achieved largely through lower spending,” the IMF said.

For the IMF, concrete tax and spending measures would enhance transparency and confidence in the fiscal targets, even with the anticipated delays.

It can be noted, however, that the IMF opposed the legislation of a GTA, arguing that such a measure would hurt overall tax compliance among taxpayers. Lower compliance could stem from the belief that if taxes can be eliminated through an amnesty, it would be better to wait for the next amnesty to settle pending taxes.

Instead, the IMF recommended implementing “voluntary disclosure programs” that allow taxpayers to come forward on their own to correct unpaid or misreported taxes, usually with limited penalty relief.

These programs are seen as a better alternative for long-term tax compliance and as protective of sustained revenue expansion.

Last September, the Department of Finance (DOF) said the proposed GTA will likely cover internal revenue taxes from 2007 to 2024, resuming from the last amnesty implemented in 2007 that generated around ₱5.9 billion.

The upcoming GTA aims to encourage voluntary compliance and could possibly yield higher collections than the previous amnesty, though exact projections are not yet finalized. It also differs from a bill vetoed by former president Rodrigo R. Duterte, with the current administration framing it as a simpler, streamlined measure.

Several tax policy options are also available, the IMF said, including making collection of the 12-percent value-added tax (VAT) more efficient, raising excise taxes on unhealthy products, and adjusting VAT exemptions on property ownership to make the tax system fairer.

On the spending side, refining incentives and strengthening the ability of local government units (LGUs) to plan, spend, and report funds would help ensure “effective devolution of spending responsibilities.”

Additionally, reforming the military and uniformed personnel (MUP) pension system by introducing a contributory scheme, rather than fully relying on state funding, would allow the government to better manage personnel costs and the growth of pension spending.

Alongside this recommendation is halting pension increases tied to personnel’s current salaries.

Manila Bulletin reported earlier that the Marcos Jr. administration’s economic team has warned that the MUP pension system poses a growing fiscal risk, with unfunded liabilities reaching at least ₱9.6 trillion in 2023 due to automatic indexation and rising active personnel salaries.

In its Fiscal Risks Statement 2026 published this month, the Cabinet-level, interagency Development Budget Coordination Committee (DBCC) stressed that without reforms such as mandatory contributions for new entrants, caps on salary adjustments, and sustainable funding sources, the pension system could increasingly strain the national budget.

Past proposals have included raising the retirement age, creating a separate pension system for incoming personnel, and using military land assets to fund pensions, but no reforms have been enacted across the past three administrations.

The DBCC also noted that recent base pay increases for MUP and civilian workers could further heighten fiscal pressures if pension adjustments follow suit.