The national government’s outstanding debt is projected to breach the ₱21-trillion mark for the first time, hitting a record ₱21.48 trillion by the end of 2027 as the Marcos administration ramps up borrowing to fund infrastructure projects and development programs.

According to medium-term financial projections from the Department of Budget and Management (DBM) detailed in the Budget of Expenditures and Sources of Financing (BESF), total liabilities are expected to expand to ₱19.77 trillion by the end of 2026—an 11.6 percent increase from ₱17.71 trillion at end-2025.

Finance Secretary Frederick D. Go earlier told Manila Bulletin that the government retains sufficient fiscal space to increase borrowing for infrastructure and development, playing down concerns over sovereign debt, which has reached its highest level relative to economic output in more than two decades.

The accelerated pace of borrowing, combined with sluggish economic growth, pushed the debt-to-gross domestic product (GDP) ratio to 66 percent at the end of June. This marks the highest level recorded in 21 years, dating back to President Gloria Macapagal-Arroyo’s administration in 2004, when the ratio peaked at 71.6 percent.

Based on the BESF documents—submitted to Congress alongside the proposed ₱7.2-trillion national budget for 2027—total sovereign debt will accumulate an additional ₱1.71 trillion between 2026 and the end of 2027. In his budget message, President Marcos framed the record spending plan not merely as a financial proposal, but as “a strategic investment in the Filipino people” and the nation's future.

By breakdown, the domestic debt stock is forecast to grow to ₱14.28 trillion by the end of 2027, up from a projected ₱13.23 trillion at end-2025. Over the same period, outstanding foreign debt is expected to rise to ₱7.2 trillion from ₱6.54 trillion.

Total gross borrowings are set to climb to ₱3.30 trillion in 2027, up significantly from the ₱2.73 trillion programmed for 2026.

Domestically, gross borrowings are forecast to surge to ₱2.39 trillion in 2027 from ₱1.92 trillion in 2026. Fixed-rate Treasury bonds will continue to drive domestic financing, projected to increase to ₱2.33 trillion from ₱1.81 trillion. Conversely, gross issuances of short-dated Treasury bills are estimated to decline to ₱1.28 trillion in 2027 from ₱1.74 trillion in 2026.

External gross borrowings are projected to rise to ₱914.98 billion in 2027 from ₱815.5 billion in 2026, including ₱365.98 billion from offshore commercial bonds and other market inflows. Foreign program loans are expected to dip slightly to ₱366 billion in 2027 from ₱403.8 billion in 2026, while foreign project-specific loans are expected to nearly double to ₱183 billion.

Under the government's medium-term financing program, the borrowing mix for 2027 will shift slightly to 72 percent domestic and 28 percent external, compared to the 70:30 ratio set for 2026. These borrowings are structured to cover a fiscal deficit projected at ₱1.69 trillion for 2027, up from ₱1.66 trillion in 2026.

Meanwhile, debt service expenditures are expected to surge 32.2 percent to a record ₱2.70 trillion in 2027, compared to ₱2.05 trillion in 2026.

This sharp increase is primarily driven by a jump of over 50 percent in principal repayments, which will reach ₱1.59 trillion in 2027 from ₱1.05 trillion in 2026. Domestic principal payments are projected at ₱1.34 trillion in 2027, up from ₱873.7 billion in 2026, while foreign principal repayments will rise 44.4 percent to ₱254 billion from ₱175.9 billion.

Interest payments will also expand across both domestic and offshore debt portfolios through 2027, reaching ₱1.11 trillion—an 11.9 percent increase from ₱995.6 billion in 2026. Servicing on domestic interest will rise to ₱812.4 billion from ₱741.2 billion, while interest paid to foreign creditors will grow at a faster rate of 18.6 percent to ₱301.9 billion in 2027, up from ₱254.5 billion in 2026.