President Marcos retains ample fiscal room to expand government borrowing to support infrastructure and development programs, according to his chief economic manager, brushing off concerns over sovereign debt that has climbed to its highest level relative to economic output in more than two decades.

Finance Secretary Frederick D. Go told Manila Bulletin on Friday, Aug. 7, that the national government retains “a lot of room” to secure additional financing from international and domestic lenders to fund key policy initiatives under President Marcos.

The finance chief’s statement follows economic data showing Philippine gross domestic product (GDP) grew by 2.3 percent in the second quarter of 2026, marking a post-pandemic low and decelerating from 2.8 percent in the previous quarter.

The slower economic momentum coincided with the sharp expansion in national government obligations, pushing total debt stock to ₱19.07 trillion at the end of June—surpassing the government’s ₱19.06 trillion debt ceiling targeted for the full year.

The rapid rise in borrowing combined with sluggish output lifted the national government debt-to-GDP ratio to 66 percent at end-June. That represents the highest level recorded in 21 years, matching levels last seen during the administration of President Gloria Macapagal Arroyo in 2004, when the ratio peaked at 71.6 percent.

By comparison, the debt ratio reached a low of 39.6 percent in 2019 under former President Rodrigo Duterte.

But for Go, the country’s fiscal position should be measured by the general government (GG) debt-to-GDP ratio, a metric preferred by credit rating agencies because it nets out intra-government debt holdings.

According to the finance chief, the latest GG debt-to-GDP ratio is estimated at “around 56 percent,” well below the World Bank’s 70-percent threshold. Exceeding that threshold signals elevated debt, which could strain the country’s debt-carrying capacity and weigh on economic growth.

The government aims to reduce the GG debt-to-GDP ratio to 54.7 percent by the end of President Marcos’ term in 2028. However, fiscal and macroeconomic challenges could pose headwinds to achieving that target.

Union Bank of the Philippines chief economist Ruben Carlo O. Asuncion said the weak second-quarter GDP outturn, one of the softest post-pandemic performances, partly explained the rise in the debt-to-GDP ratio to 66 percent.

Asuncion said the rise in the debt-to-GDP ratio was driven not only by higher borrowings but also by the pace of economic growth, as both factors determine the overall ratio. As such, the end-June figure reflected persistent borrowing needs and sluggish economic growth.

“While the ratio is elevated by historical standards, it should not automatically be viewed as a cause for alarm,” Asuncion said.

He said the more important consideration is whether the country’s debt remains manageable and whether the borrowed funds are being used to support economic growth, infrastructure, and job creation.

For the economist, the ideal way forward is to accelerate growth while maintaining fiscal discipline.

To sustainably bring down the debt-to-GDP ratio, Asuncion cautioned that “aggressive fiscal tightening” alone would not be enough and must be accompanied by robust economic growth.

“A faster-growing economy generates higher revenues, supports employment, and gradually reduces the debt burden relative to the size of the economy,” Asuncion said, adding that the challenge for policymakers is to strike the right balance between these drivers.

Similarly, Reyes Tacandong & Co. senior adviser Jonathan Ravelas said debt is no longer just a fiscal issue but is also becoming a growth concern.

“Without a credible plan to expand revenues, improve spending efficiency, and accelerate private sector investment, the burden of today’s debt will increasingly be passed on to future generations,” Ravelas said.