The national government's debt soared to a new record high of ₱16.63 trillion at the end of the first two months of 2025, putting pressure on its capability to repay obligations.
The latest Bureau of the Treasury (BTr) data released on Tuesday, April 1, showed that outstanding obligations as of end-February inched up by almost two percent month-on-month and climbed 9.6 percent year-on-year.
In a statement, the BTr said that the public debt level was still "manageable," and attributed the "measured" month-on-month hike to net issuance of fresh locally and externally sourced borrowings to bankroll government programs and projects.
Domestic obligations, which comprised over two-thirds of the debt pile, rose 1.3 percent month-on-month and 6.1 percent year-on-year to ₱11.22 trillion.
The BTr explained that it raised a net of ₱140.7 billion from treasury bills and bonds snapped up by local creditors during the first two months, as ₱127.5-billion worth of matured debt paper offset gross issuances of government securities (GS) amounting to ₱268.3 billion.
External debt, meanwhile, increased by a faster 3.4 percent month-on-month and jumped 17.5 percent year-on-year to ₱5.41 trillion.
The BTr said the government borrowed more from commercial debt markets as well as multilateral lenders and bilateral development partners during the two-month period, such that net availment of foreign borrowings reached ₱193.7 billion.
In February alone, the Philippines secured ₱197.3 billion in financing from foreign sources—₱190.8 billion from a triple-tranche global bond issuance, with 10- and 25-year United States (US) dollar-denominated bonds worth $2.3 billion and one-billion worth of 25-year euro bonds; plus project loans amounting to ₱6.5 billion.
"Project loans were used on rail projects through the Japan International Cooperation Agency (JICA), ₱3.9 billion; physical connectivity and health sector interventions in partnership with the Asian Development Bank (ADB), ₱1.7 billion; and agricultural and health sector programs assisted by the International Bank for Reconstruction and Development (IBRD), ₱910 million," the BTr explained. The IBRD is the World Bank's lending arm for developing country-clients like the Philippines.
The stronger Philippine peso against the US dollar in February nonetheless tempered the uptick in both domestic and foreign obligations, the BTr added.
In a March 31 report, debt watcher Moody's Ratings said that the Philippines has among the lowest external vulnerability indicator (EVI) ratios among emerging markets, indicating that its economy has relatively lower susceptibility to external financial shocks.
However, "while the Philippines has the lowest EVI in its region and an external debt-to-GDP [gross domestic product] ratio of 27 percent, nearly all of its debt is denominated in foreign currency," Moody's said.
"This makes the country highly sensitive to exchange rate fluctuations, which can increase debt-servicing costs in times of currency depreciation," the debt watcher added.
Under the 2025 national budget, the Philippines will repay a record ₱2.05 trillion in debt this year, up from ₱2.02 trillion last year.
The national government will settle ₱1.61 trillion in domestic obligations in 2025, on top of ₱436.8 billion in foreign debt, although lower than last year's ₱458.6-billion foreign debt servicing.
"Additionally, the Philippines' current account deficit of $12 billion further exacerbates its vulnerability" to capital outflows, according to Moody's.