Weak growth, revenues imperil debt stabilization—CPBRD

MANILA, Philippines — The government’s fiscal consolidation plan may not effectively stabilize the country’s debt, projected to reach 72.9 percent by 2030, because of weak economic growth and sluggish revenue generation.

In its latest budget brief, the Congressional Policy and Budget Research Department (CPBRD) projected that the national government’s debt-to-GDP ratio could rise to 66 percent this year and continue its upward trend to 70.5 percent in 2028 before reaching 72.9 percent in 2030—well above the 60-percent benchmark often used for emerging markets.

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This contrasts with the government’s original debt path, which envisioned the ratio falling below 60 percent and declining further to 51.1 percent by 2028.

“Weaker-than-expected growth, higher borrowing costs, prolonged energy price pressures, exchange-rate movements, or larger fiscal deficits could cause the debt trajectory to deteriorate further,” CPBRD said.

“Ultimately, the key fiscal challenge is not simply keeping debt below a particular numerical benchmark, but placing the debt-to-GDP ratio on a credible stabilizing and eventually declining path while preserving the government’s capacity to finance development priorities,” it added.

CPBRD further added it expects growth—the main driver of debt reduction—to stay below the downgraded 3.5–4.5% target this year.

Moreover, the think tank projects the economy to grow by only 2.3 to 2.6 percent in 2026, with third-quarter growth seen at 2.1 to 2.3 percent and fourth-quarter growth at 2.1 to 2.9 percent.

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“The Philippine economy continues to face new shocks that compound long-standing structural weaknesses, making the outlook more difficult and sharpens the need for timely and targeted policy action,” CPBRD said.

Meanwhile, CPBRD underscored a weakening medium-term revenue outlook, stating that revenues will not grow quickly enough in comparison to the economy.

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Currently, the government projects national government revenues to rise from P4.81 trillion in 2026 to P5.99 trillion in 2029. Revenue effort is weakening, as revenues as a share of GDP have dropped from 15.8 percent to 15.5 percent.over the same period.

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

Likewise, the projection indicates that the tax effort ratio will hit 14.6 percent of GDP in 2026 and gradually rise to 14.9 percent by 2029.

Furthermore, CPBRD said these nominal increases may not be enough to keep pace with the economy.

“The fiscal challenge, therefore, is not simply whether revenues continue to grow, but whether the revenue system can generate sufficient and sustainable resources relative to the size of the economy to finance expenditure priorities while restoring the fiscal consolidation path,” CPBRD said.

“The FY 2027 budget should therefore be assessed not only against the nominal level of projected revenues but also against the credibility, sustainability, and underlying risks of the revenue program,” it added. /pai