The national government’s outstanding debt breached the ₱19-trillion mark for the first time, surpassing its full-year fiscal target six months ahead of schedule following a sharp acceleration in local and foreign borrowing.

The Bureau of the Treasury reported on Thursday, July 30, that total sovereign debt reached ₱19.07 trillion at the end of June, exceeding the government’s ₱19.06-trillion ceiling set for the end of 2026.

The debt stock expanded by ₱519 billion, or 2.8 percent, from ₱18.55 trillion at the end of May.

According to the Treasury, the debt stock bloated during the month due to the “net availment of both domestic and external borrowings” meant to fund government programs. This surge came despite the favorable footing of the peso against the United States (US) dollar during the period.

The government traditionally favors sourcing its borrowings locally to lessen the country’s exposure to foreign exchange (forex) risks and anchor the stability of its sovereign debt profile.

Domestic debt, which currently represents 67.3 percent of the country’s total obligations, rose to ₱12.84 trillion—a 2.7 percent increase from the ₱12.50 trillion reported in May.

According to the Treasury, the main driver of this increase was ₱342.9 billion in net new borrowings raised through the sale of government securities, such as long-term Treasury bonds and short-term bills. During the month, a stronger peso also helped by providing a ₱600-million downward adjustment to the valuation of onshore dollar bonds.

Meanwhile, external debt swelled during the first half to reach ₱6.23 trillion, up from ₱6.05 trillion in May.

This increase was mainly attributed to ₱223.1 billion in fresh loans the government took out in June. These new borrowings outweighed a ₱46.5-billion reduction in the peso value of foreign currency-denominated debt, which resulted from the peso's appreciation against the greenback and other third currencies.

During the month, the peso strengthened from ₱61.501 to ₱61.290 against the US dollar. Still, the current external debt level reflects an 11.4 percent increase from the end-2025 level of ₱5.59 trillion.

Conversely, government-guaranteed obligations saw a significant decline, falling to ₱305.1 billion at the end of the first semester—down by nearly a third from the end-May level of ₱443.5 billion.

This drop was driven primarily by ₱136.7 billion in net repayments of domestic guarantees, alongside ₱470 million in external guarantee repayments and ₱1.3 billion in favorable forex movements. (Derco Rosal)