Debt-to-GDP Ratio Goes Above Important Level
The Philippines’ debt load was much higher at the end of 2025. The Bureau of the Treasury’s data confirmed the rise. By December, the debt-to-GDP ratio had risen to 63.2%.
This compares with 60.7% recorded at the end of 2024. The most recent number is the highest since 2005. It also goes above the widely accepted 60% sustainability limit.
Source: Asia News Network/Website
Record High Sovereign Debt Despite Slower Growth
By the end of the year, the national government’s debt had risen to P17.71 trillion. This was a rise of 10.32% from P16.05 trillion. The growth was due to more borrowing to cover budget needs.
During the same time, nominal GDP was over P28 trillion. But in 2025, the economy grew much more slowly. The GDP only grew by 4.4%.
Weakest Growth Since the Pandemic Shock
The 4.4% growth was the slowest since 2020. During the COVID crisis, that year saw a 9.5% drop. The pressure on the debt ratio grew as growth slowed.
The value effects were also caused by a weaker peso. The peso cost of foreign debt went up because the currency lost value. This made overall obligations even higher.
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Economists Call for Changes to the Budget
Michael Ricafort, the chief economist at Rizal Commercial Banking Corp, spoke up. He said that getting the ratio below 60% is very important. Fiscal discipline is what keeps good credit ratings.
The Philippines is currently rated 1 to 3 notches above the lowest level of investment grade. Keeping that buffer helps investors feel safe and lowers the cost of borrowing. Because of this, reforms to fiscal management are seen as urgent.
Focus On Tax Collection And Compliance
Ricafort said that making tax collection stronger should be a top priority. Tax authorities should do more to enforce the laws that are already in place. Chasing down tax evaders is still a key strategy.
He said that new or higher taxes should be a last resort. If inflation stays the same, these kinds of steps might be taken. It’s better to have steady revenue growth than sudden tax hikes.
Spending Discipline And Growth Strategy
If the economy keeps growing, the burden ratio will get better. More GDP growth makes the denominator in calculations bigger. This makes things more sustainable when combined with fiscal reforms.
It’s also very important for the government to spend money wisely. A smart use of resources can help keep debt from growing too quickly. Balanced budgeting helps keep the economy strong in the long run.
Government Targets Debt Reduction By 2028
Under President Ferdinand Marcos Jr., economic managers have set goals. Their goal is to get the ratio below 60% by 2028. To do this, a coordinated fiscal strategy is needed.
In 2019, before the pandemic, the ratio hit an all-time low of 39.6%. The current level shows how much work needs to be done to fix the economy. Policymakers are now under pressure to bring back stable debt dynamics.
