PH gov’t debt seen surging to record high P21.5T in ’27

MANILA, Philippines — The national government’s outstanding debt is projected to climb to a record P21.479 trillion by end-2027 amid the peso’s depreciation and a slower pace of fiscal consolidation, according to the Department of Budget and Management (DBM).

In its Budget of Expenditures and Sources of Financing for fiscal year 2027, the DBM said next year’s debt stock projection assumes a peso-dollar exchange rate of P62 against the dollar.

READ: PH debt hits new peak at P18.55T

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Notably, the peso has weakened amid market volatility stemming from the Middle East war.

The 2027 debt figure will mark a nearly 9-percent increase from the revised 2026 debt stock projection of P19.765 trillion.

If realized, it would also represent a nearly 68 percent increase from the P12.79 trillion debt inherited by the Marcos administration at the start of its term in June 2022.

The new debt projections came after the DBM transmitted the proposed P7.2-trillion 2027 national budget to Congress on Tuesday.

“So many of our loans were contracted during the pandemic. During that time, forex was just around P49.6 to a dollar. Now, it’s around 60. With that, we can say the peso has depreciated by almost 20 percent. That led us to incur higher costs,” DBM Assistant Secretary Romeo Balanquit told reporters.

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“Our old loans were contracted at a lower interest rate. Now they are maturing. So we have to refinance using new loans. But worse because this will be at a higher interest rate,” he added.

Breaking down the 2027 debt stock, domestic debt is projected at P14.282 trillion, while external debt is seen at P7.197 trillion.

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According to Balanquit, the projected debt stock will result in a debt-to-gross domestic product (GDP) ratio of 64.4 percent in 2027, slightly lower than the 64.9 percent projected for 2026. The ratio is expected to decline further to 63 percent by 2030.

Repayments

As of this writing, the national government has P19.07 trillion in outstanding debt as of end-June. Coupled with the economy’s 2.3-percent growth in the second quarter, this translates to a debt-to-GDP ratio of 66 percent.

On debt payments, meanwhile, the Marcos administration is expected to repay a total of P2.704 trillion in 2027. Of this amount, P1.114 trillion will go to interest payments alone, equivalent to 15.9 percent of the proposed P7.2-trillion national budget. The interest bill will be nearly 12 percent higher than the P995.61 billion programmed for 2026.

READ: PH government debt stock tops P19 trillion

Principal amortization is projected at P1.590 trillion, 51.5 percent higher than the P1.049 trillion programmed for this year.

Gross borrowings are set at P3.304 trillion next year, consisting of P2.389 trillion from domestic sources and P914.98 billion from external sources. The government plans to use the borrowings to help finance a projected fiscal deficit of P1.694 trillion, equivalent to 5.1 percent of GDP.

Balanquit said the government’s decision to accommodate a higher deficit trajectory also contributed to the increase in borrowing requirements.

For Philippine Institute for Development Studies senior research fellow John Paolo Rivera, the current figures signal a tighter fiscal position for the government.

“Debt burden remains elevated and a sizable portion of government resources is already committed before funding new programs through interest payments. The concern is not only the size of the debt, but the growing cost of carrying it,” he said.

Still, Balanquit said the record-high debt level should not necessarily be considered bad debt.

“It’s not bad debts because you are able to make use of this money for something productive and for long-term investment like infrastructure. We are not borrowing for aid. We are borrowing for program loans, project loans, official development assistance. These are mainly for infrastructure projects,” he said. INQ