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THE NATIONAL GOVERNMENT’S (NG) unpaid liabilities surged to an unprecedented P17.56 trillion at the conclusion of July, surpassing its entire-year estimate for 2025, data from the Bureau of the Treasury (BTr) indicated.
Recent information from the BTr revealed that unpaid liabilities climbed by 11.9% from P15.69 trillion in July 2024.
This was already 1.15% above the P17.36-trillion expected liabilities by end-2025.
Despite exceeding the 2025 forecast, the Treasury stated that the liability stock is predicted to decrease by year-end as the government settled P814.2 billion in domestic bonds by December and as “fundraising activities conclude.”
On a month-to-month basis, NG liabilities slightly increased by 1.7% from P17.27 trillion in June, as reported by the BTr.
NG liabilities comprise the total amount owed by the Philippine administration to creditors, including global financial entities, developmental partner nations, banks, international bondholders, and other investors.
“To lessen exposure to foreign exchange risks, the government continued to prefer domestic borrowings to enhance the local capital market, achieving a funding mix of 76% domestic financing and 24% external borrowing in the first seven months of the year,” the Treasury noted.
“Consequently, the domestic portion of the liability stock rose to 68.9% at the end of July from 68.1% at the close of 2024.”
Domestic borrowings surged by 12.6% to P12.11 trillion as of end-July from P10.75 trillion in the corresponding month last year.
This is also 0.52% higher than the P12.04-trillion year-end domestic liability projection.
On a month-to-month basis, domestic borrowings experienced a slight rise of 1.3% from P11.95 trillion at end-June.
Domestic borrowings were primarily composed of government securities.
Conversely, external obligations increased by 10.5% to P5.46 trillion as of end-July from P4.94 trillion the previous year. This also surpassed the P5.32-trillion external liability estimate for this year by 2.63%.
On a month-to-month basis, external obligations edged up by 2.6% from P5.32 trillion at end-June.
Foreign obligations primarily consisted of P2.79 trillion in global bonds and P2.67 trillion in loans.
External liability securities comprised P2.37 trillion in US dollar bonds, P252.46 billion in euro bonds, P58.5 billion in Japanese yen bonds, P58.19 billion in Islamic certificates, and P54.77 billion in peso global bonds.
As of end-July, the NG-guaranteed obligations rose by 2.4% to P352.97 billion from P344.79 billion a year prior.
On a month-to-month basis, it also slightly increased by 2.3% from the end-June amount of P345.11 billion.
“The Marcos, Jr. administration remains committed to prudent debt management by leveraging strong investor trust in peso-denominated securities while ensuring that borrowings are at the lowest feasible cost and support fiscal sustainability, inclusive growth, and a more robust Philippine economy,” the Treasury asserted.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort stated that liabilities soared as the government intensified borrowings to cover the expanding budget deficit.
During the January-to-July timeframe, the fiscal shortfall widened by 22.04% to P784.4 billion amid increased state expenditures. This was on course to meet the revised P1.56-trillion full-year deficit cap, the BTr pointed out.
“(The liabilities) could potentially exceed P18 trillion by end-2025 at the current rate of the year-to-date increase unless curtailed through smaller budget deficits in the coming months,” Mr. Ricafort commented.
Nevertheless, he noted that this might be partially balanced by the settlement of significant maturing NG obligations, particularly in August and September.
“This (growing debt) is alarming but not entirely unforeseen given persistent borrowing requirements, a weakened Philippine peso, and spending demands related to infrastructure, subsidies, and tariff-related buffers,” stated Philippine Institute for Development Studies Senior Research Fellow John Paolo R. Rivera in a Viber message.
Mr. Rivera expressed that it is likely the NG liability level will surpass the year-end estimate if current trends continue, such as “modest revenue growth” and “significant spending requirements for flood control, defense, and infrastructure initiatives.”
Previously, the Finance department estimated outstanding liabilities to reach P19.1 trillion by 2026, increasing to P20.5 trillion by 2027, P21.9 trillion by 2028, and P23.4 trillion by 2029. By 2030, outstanding liabilities are anticipated to reach P24.7 trillion.
At the end of the second quarter, NG liabilities as a portion of gross domestic product surged to 63.1%, the highest since 2005. This is above the 60% debt-to-GDP benchmark regarded by multilateral lenders to be manageable for developing nations.
The DoF anticipates the debt-to-GDP ratio to decrease to 61.3% by end-2025 and eventually decline to 58% by 2030. — Aubrey Rose A. Inosante
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