Public Debt

The Budget of Expenditures and Sources of Financing submitted with the 2027 national budget shows the government expects its debt stock to climb 8.7% next year, driven by a weaker peso and a gross borrowing program raised to ₱3.3 trillion — just weeks after debt already breached ₱19 trillion six months ahead of schedule.

Budget documents submitted to Congress alongside the proposed ₱7.2-trillion 2027 national budget show the Marcos administration raising its gross borrowing target to ₱3.3 trillion, pushing debt service costs to a record ₱2.70 trillion even as the debt-to-GDP ratio already sits at a 21-year high.

Government economists say a 32.4% collapse in public construction — tied to agencies' reluctance to approve projects after the flood-control corruption scandal — cost the economy roughly a percentage point of growth in the second quarter, pushing the debt-to-GDP ratio to 66%, its highest since 2004.

The Bureau of the Treasury says the first-half deficit came in just under the government's own target, but interest payments alone hit ₱483.7 billion — a growing claim on the budget that leaves less room for the ₱7.2-trillion 2027 spending plan Malacañang has asked Congress to approve.

Government economists now project the debt-to-GDP ratio will linger in the 60–63% range through 2026 — the worst sustained level in two decades — as Middle East war-driven oil shocks force fresh emergency borrowings on top of a fiscal position already strained by collapsing infrastructure spending and slowing growth.

Bureau of the Treasury data show the government's debt service bill rose 12.1% year-on-year to ₱314.89 billion in April and surged 68.9% to ₱1.05 trillion in the first four months of 2026 — already half of last year's full-year total — as analysts split over whether the spike reflects lumpy maturities or a deeper squeeze on development spending.

Oxford Economics warns that Manila — carrying the widest fiscal deficit in ASEAN at 5.6% of GDP — will be forced to rein in government spending as interest payments consume over 15% of revenue and borrowing costs climb, compounding the infrastructure collapse already caused by the flood control graft crackdown.

The 2026 Chandler Good Government Index ranked the Philippines four spots lower than last year, with analysts pointing to corruption scandals, institutional weaponization, and policy drift as the drivers — while the country scored near the bottom globally on ethical leadership, rule of law, and budget surplus.

The PPP Center's dashboard shows 537 public-private partnership projects worth ₱6.7 trillion as of end-May — 250 in the pipeline worth ₱3.15 trillion and 287 under implementation worth ₱3.58 trillion — with rail projects dominating value, even as the government's reliance on private financing grows amid a widening fiscal deficit and frozen public-works spending.

An Oxford Economics analysis released this week warned that the Philippines — entering 2026 with Southeast Asia's widest budget deficit — now faces the most severe market pressure in the region to cut state spending, as rising borrowing costs consume an ever-larger share of government revenue and the economy digests the fallout from the flood control corruption crackdown.