The national government remains committed to narrowing its budget deficit and easing its debt burden by 2030, according to the Department of Budget and Management (DBM), even as it recalibrates key fiscal targets amid persistent economic headwinds.

Mary Joy O. de Leon, DBM director for the Fiscal Planning and Reforms Bureau (FPRB), told agency planners that the country is maintaining a steady trajectory toward the macro-fiscal targets outlined in its Medium-Term Fiscal Framework.

The outlook comes as officials begin drafting the 2027 national budget, which will serve as the current administration’s final full-year spending plan.

The government’s optimism persists despite a series of adjustments to its deleveraging timeline. Fiscal authorities recently moved the target for bringing the debt-to-gross domestic product (GDP) ratio below the 60 percent threshold to 2029, further delaying from the previous goal of 2027, which itself had been pushed back from an initial 2025 deadline.

Notably, the government’s total outstanding debt climbed to a new record of ₱17.71 trillion by the end of 2025, driven by additional borrowing to fund projects and the peso’s continued depreciation against the US dollar and other currencies. This level overshot the end-2025 target of ₱17.36 trillion.

Consequently, the debt-to-GDP ratio stood at 63.2 percent, the highest in 20 years since the 65.7 percent recorded in 2005. This indicates that the government is moving away from its stated aim of keeping the sovereign-debt-to-GDP ratio at around 60 percent by the end of the Marcos administration.

Compounding the challenge, the Cabinet-level Development Budget Coordination Committee (DBCC) projected that the debt stock would exceed ₱19 trillion by the end of 2026.

“Unforeseen headwinds warranted updating of the MTFF to ensure that it remains realistic and supportive of growth,” de Leon said.

For one, the target for narrowing the fiscal deficit to 3 percent of GDP by 2028 was revised upward to 3.7 percent for the same period, before being reduced to 3.1 percent by 2030.

It can be recalled that the deficit exceeded targets in 2023 and 2024, widening to 6.2 percent and 5.7 percent, respectively. The Bureau of the Treasury (BTr) has yet to report the 2025 deficit level.

Meanwhile, the government has raised the bar for transitioning to upper-middle-income country (UMIC) status. To achieve UMIC status, the gross national income (GNI) per capita target was increased from $4,256 to at least $4,496.

Several revisions were also made to economic targets, now setting annual growth at six to seven percent from 2026 through 2030. The economy slumped to a below-target 4.4 percent in 2025 as it bore the brunt of the controversial flood control mess.

De Leon told agency budget planners to maximize allocations for the fiscal year (FY) 2027 budget, “considering the impact of the country’s debt burden and the competing demands of government agencies.” She added that implementation-ready proposals should be included in the budget.