By Aubrey Rose A. Inosante, Reporter
THE NATIONAL Government’s (NG) total debt is anticipated to surge to a historic P19.06 trillion by the conclusion of 2026, as per a document from the Department of Budget and Management (DBM) released on Wednesday.
This comes as the government intends to raise P2.68 trillion next year to finance the national budget.
The 2026 Budget of Expenditures and Sources of Financing indicated that the NG’s debt stock is predicted to rise by 9.78% from the revised P17.36-trillion estimate for the end of 2025.
Of the overall amount, domestic debt is projected to increase by 10.27% to P13.28 trillion by the end of 2026, up from the anticipated P12.04 trillion by the close of 2025.
Outstanding external debt is also expected to climb by 8.67% to P5.78 trillion by the end of 2026 from P5.31 trillion by the end of 2025.
Finance Secretary Ralph G. Recto informed BusinessWorld that the NG debt remains manageable, emphasizing that the economy will be roughly valued at P31.8 trillion by 2026.
As of June, the Philippines’ sovereign debt reached a new height of P17.27 trillion, rising 11.5% from P15.48 trillion during the same month in 2024.
This elevated the debt-to-gross domestic product (GDP) ratio to 63.1% at the close of June, marking the highest ratio since 2005. This surpasses the 60% debt-to-GDP limit regarded by multilateral lenders as sustainable for developing nations.
“It’s still aligned with our MTFF (Medium Term Fiscal Framework). However, we aim for at least 60%, which is the international benchmark,”
Budget Secretary Amenah F. Pangandaman stated to journalists on the sidelines of the 2026 National Expenditure Program turnover at the House of Representatives.
“Ideally, we can achieve that or possibly even reduce it to around 59% or 58%,” Ms. Pangandaman added.
The DBM indicated that the debt-to-GDP ratio is now expected to settle at 61.3% by the conclusion of 2025, slightly above the former target of 60.4%.
By the end of 2026, the debt-to-GDP ratio is projected to rise to 61.8%.
Budget Assistant Secretary Romeo Matthew T. Balanquit mentioned that the elevated forecasts for the debt-to-GDP ratio account for slower economic growth expectations.
In June, economic managers narrowed the GDP growth target range to 5.5-6.5% this year from the earlier target of 6-8%, “reflecting a more cautious and resilient outlook amidst global challenges.”
The growth target was also reduced to 6-7% for 2026 to 2028 from 6-8% previously.
Mr. Balanquit stated that the substantial debt was incurred by the government during the coronavirus disease 2019 (COVID-19) pandemic.
“We are honoring our debts from the pandemic period. It is crucial to enhance our interest payments. However, the positive aspect is that interest rates are actually declining,” he noted.
“We will also observe that borrowing costs will lessen over the upcoming years. Admittedly, our interest payments are on the rise,” he added.
BORROWING PROGRAM
Meanwhile, the government’s borrowing initiative for 2026 is set at P2.68 trillion, reflecting an increase of 3.15% from this year’s P2.6 trillion.
Mr. Balanquit indicated that the borrowing composition maintains an 80:20 ratio favoring domestic sources to mitigate risks from external shocks.
Gross domestic borrowings are established at P2.05 trillion for 2026, 2.7% above the P2.11-trillion program in 2025. This includes P1.99 trillion in fixed-rate Treasury bonds and P60 billion in Treasury bills.
Conversely, gross external borrowings have been set at P627.1 billion for next year, an increase of 28.46% compared to this year’s P488.17 billion.
This incorporates P302.100 billion in bonds and various inflows, P263.29 billion in program loans, and P61.71 billion in project loans.
Simultaneously, the debt service obligation is projected at P2.01 trillion in 2026, a decrease of 2.36% from this year’s P2.05 trillion.
The government stated it will allocate P1.06 trillion for principal repayments next year, a 12.48% reduction from P1.21 trillion in 2025.
For interest disbursements, the government has earmarked P950 billion, a 12% drop from P848 billion this year.
TAX REVENUES
For 2026, the NG aims to accumulate P4.98 trillion in revenues, an increase of 10.24% over the projected P4.52-trillion collection this year.
The government anticipates collecting P4.63 trillion in tax revenues next year, a 9.96% rise from its P4.21-trillion estimate this year.
The Bureau of Internal Revenue is expected to generate P3.58 trillion, while the Bureau of Customs is projected to yield P1.01 trillion.
Conversely, nontax revenues are expected to decline by 17.38% to P249.1 billion next year from P301.5 billion this year.
Returns from the government’s privatization initiative are projected to jump to P101 billion in 2026 from P5 billion this year.
