The Marcos administration increased its reliance on local capital markets to fund its budget last year, pushing the government’s total gross borrowings to a record high even as it scaled back international bond issuances to mitigate currency risks.

According to the latest data from the Bureau of the Treasury, the national government’s total gross borrowings reached ₱2.65 trillion in January to December last year, a 3.5 percent increase compared to ₱2,56 trillion recorded a year earlier.

In 2025, domestic fundraising jumped 9.74 percent to ₱2.11 trillion from ₱1,92 trllion a year ago. Fixed-rate Treasury bonds remained the cornerstone of the government’s local financing program, generating ₱1.23 trillion.

The Treasury also diversified its local toolkit by reintroducing fixed-rate Treasury notes, which raised ₱300 billion in April 2025 after a year of inactivity for the instrument.

While the national government continued to tap the retail market, appetite for those specific instruments appeared more tempered than in previous periods. Retail Treasury bonds brought in ₱425.6 billion in August 2025, a significant decline from ₱584.8 billion raised through the same facility in 2024.

The increased local activity allowed the Department of Finance (DOF) to pull back from more expensive or volatile offshore markets.

Meanwhile, gross external borrowings fell 15 percent to ₱543.2 billion from ₱641.2 billion in 2024. This retreat was most visible in global bond issuances, which plummeted to ₱192 billion from ₱256.2 billion the previous year.

The heavy borrowing schedule was partially necessitated by a fiscal deficit that reached ₱1.58 trillion in 2025, roughly 4.7 percent higher than the ₱1.51 trillion recorded in 2024.

Although the deficit slightly exceeded the government's ₱1.56 trillion ceiling, the deficit-to-gross domestic product (GDP) ratio improved to 5.63 percent from 5.7 percent, signaling progress in long-term fiscal consolidation.

Revenue collection for the year rose marginally to ₱4.45 trillion, though it fell 1.48 percent short of the ₱4.52 trillion revised program.

A ₱136.8 billion shortfall in tax collections—stifled by a pause in payments for infrastructure contracts amid investigations into flood control projects—offset a ₱69.8 billion overperformance in non-tax revenues.

On the expenditure side, government disbursements totaled ₱6.03 trillion, a 1.8 percent increase from 2024 but 0.85 percent below the revised full-year target.

Spending was driven by higher interest payments, which surged 13.2 percent to ₱864.1 billion as the government serviced additional debt and repriced matured pandemic-era obligations at higher prevailing rates.

Despite the rising cost of debt, the primary deficit—which excludes interest payments—decreased to ₱712.7 billion from ₱743.0 billion a year prior.

The results highlight the government's ongoing challenge of balancing infrastructure spending with the cost of servicing a growing debt pile.

While total liabilities remain high, officials noted that the transition toward more stable, peso-denominated obligations provides a buffer against external shocks.

Net financing for the year settled at ₱1.5 trillion after accounting for ₱1.16 trillion in principal repayments.