Despite government assurances of sound financial management, the Philippines' debt burden relative to the size of its economy increased last year due to weaker-than-expected economic growth.

The Bureau of the Treasury (BTr) reported on Tuesday, Feb. 4, that the government’s total outstanding debt stood at ₱16.05 trillion as of end-2024, a 9.8-percent or ₱1.44-trillion increase from the end-2023 level of ₱14.62 trillion.

The end-2024 figure corresponds to a debt-to-gross domestic product (GDP) ratio of 60.7 percent, slightly above the 60.6-percent revised target set by the government under the Medium-Term Fiscal Framework, and higher than 2023's 60.1 percent. 

GDP grew by only 5.6 percent last year, below market expectations and the government's downscaled six- to 6.5-percent goal, as strong typhoons battered the country and hampered economic activities towards the end of 2024.

Still, the national government (NG) said that the "minimal deviation from the programmed debt underscores NG's effective cash and debt management strategies, including its proactive management of the level and timing of its external debt issuances amidst volatile exchange rate environment." 

The debt-to-GDP ratio measures how the economy is capable of repaying debts; 60 percent is the threshold deemed manageable for emerging market economies, including the Philippines. 

According to the Treasury, the annual increase was primarily due to ₱1.31 trillion in net issuance of debt instruments to fund the government's deficit program, coupled with a ₱208.73-billion valuation effect from a stronger US dollar. 

While favorable movements in other currencies reduced the total debt by ₱80.74 billion, this was not enough to offset the US dollar's impact. 

Domestic securities comprised the majority of the debt pile, at 68.1 percent, while external obligations made up the remaining 31.9 percent.

Domestic debt reached ₱10.93 trillion, a ₱912.49-billion or 9.1-percent increase from the previous year. 

Net issuance of domestic securities contributed significantly to this rise, along with the impact of local currency depreciation on foreign currency-denominated domestic securities. 

External debt stood at ₱5.12 trillion, a ₱522.55-billion or 11.4-percent rise due to net external debt availments and the peso's depreciation against the US dollar. 

The Treasury said guaranteed obligations decreased slightly to ₱346.66 billion. 

The government said that despite the slight deviation from the debt-to-GDP target, the minimal variance from the programmed debt underscores its effective cash and debt management strategies, including proactive management of external debt issuances amid a volatile exchange rate environment.