By Aubrey Rose A. Inosante, A reporter
PHILIPPINES’ The outstanding debt rose to P17.708 trillion by the end of 2025, surpassing the government’s estimate amid higher issuance and a weaker peso.
The debt of the National Government (NG) for the end of the year 2025 has increased 10.32% from the P16.05 trillion recorded last year, according to data released by the Bureau. of Treasury (BTr) on Tuesday.
This was also 2% higher than the expected year-end rate of P17.36-trillion.
Month-to-month, the debt stock rose 0.34% from P17.65 trillion at the end of November.
“The increase is due to the government’s strategic issuance of credit facilities to finance development programs, as well as the effects of the depreciation of the peso against the US dollar and third currencies,” BTr said in a statement.
The peso ended 2025 at P58.79 against the US dollar, weakening by 94.3 centavos or 1.63% from its 2024 close of P57.847. It also fell against the euro, closing at P69.0547 from P59.9179 last year. Against the yen, it fell to P0.3753 from P0.3688.
This pushed the outstanding debt as a share of gross domestic product (GDP) to 63.2% by the end of 2025, up from 60.7% last year, the Treasury said.
This is the highest annual debt-to-GDP ratio in 20 years or since 65.7% in 2005 and is above the 60% threshold considered by international lenders to be able to manage developing economies.
This is also higher than the government’s end-2025 target of 61.3% under the revised medium-term fiscal framework.
Philippine GDP growth slowed to 4.4% in 2025 from 5.7% in 2024 and missed the government’s target of 5.5%-6.5%. This was the worst economic performance in five years or since a 9.5% contraction in 2020 due to the coronavirus pandemic. Excluding the pandemic, this was the weakest annual increase since 2011’s 3.9%.
Despite the high level of debt in 2025, BTr said the country’s debt profile “remains strong” with 68.4% of borrowings coming from domestic sources.
“By prioritizing peso financing, which is mostly held locally, the government reduces exposure to exchange rate fluctuations. It also keeps interest payments within the domestic economy and provides Filipinos with a stable and secure investment option,” he said.
NG debt is the sum of money owed by the Philippine government to lenders such as international financial institutions, developing countries, banks, international bondholders and other investors.
As it decreased, domestic debt grew by 10.85% to P12.116 trillion as of December 2025 from P10.93 trillion at the end of 2024. This was 0.66% above the year-end average of P12.04-trillion.
The Department of Finance said the year-on-year increase was due to the net issuance of government securities through its regular auctions and the offering of five-year Treasury bonds in August, which raised P507.16 billion.
Month-on-month, home loans decreased by 0.1% from P12.117 at the end of November.
Meanwhile, external debt increased by 9.19% to P5.59 trillion at the end of 2025 from P5.12 trillion in 2024. This was also higher than the P5.32-trillion average and increased by 1.1% from P5.53 trillion at the end of November.
“This is driven by the issuance of new international bonds, the availability of surplus official development assistance from international development partners, and the upward revision of foreign currency debt brought about by unfavorable exchange rate movements,” said BTr.
The outstanding foreign debt was made up of P2.82 trillion in the issuance of international bonds and P2.77 trillion in loans.
Foreign debt securities were made up of P2.39 trillion in US dollar bonds, P262.41 billion in euro bonds, P58.79 billion in Islamic certificates, P56.85 billion in Japanese yen bonds, and P54.77 billion in international peso bonds.
The government raised $4.5 billion in the international market last year as it issued international bonds denominated in US dollars, raising $2 billion in May and $2.5 billion in August.
“For the full year, NG raised P1.18 trillion in domestic financing, which shows the continued confidence of investors in government securities amid volatile market conditions,” said BTr.
“External financing is always prudent and conditional. This results in a net external fiA financing level of P317.02 billion from the issuance of international bonds and program and project loans to support infrastructure, social reforms, and the agricultural and industrial sectors,” it added.
Meanwhile, NG-guaranteed loans decreased by 0.6% to P344.57 billion at the end of December from P346.66 billion last year due to net repayment of domestic and foreign guarantees.
“Guaranteed debt is still manageable at around 1.2% of GDP, indicating a low potential credit risk,” BTr said.
Month-on-month, guaranteed credit decreased by 3.22% from P356.04 billion at the end of November.
Chief Economist Rizal Commercial Banking Corp. Michael L. Ricafort said the high debt at the end of 2025 indicates an increase in debt to finance a large budget gap. The government’s budget deficit widened to P1.26 trillion in the first 11 months of 2025 from a gap of P1.18 billion in the same period in 2024.
“In the coming months, the outstanding debt of the National Government may increase significantly between the new funds borrowed by the National Government in recent months and the need to hedge the domestic and foreign loans of the National Government due to the Trump factor and other factors that pose national risks,” he said.
Jonathan L. Ravelas, a senior consultant at Reyes Tacandong & Co., said the record high debt shows that the government’s fiscal space is tightening.
“We need faster revenue growth, stronger spending discipline, and productivity-enhancing reforms,” he said in a Viber message.
Mr. Ravelas added that the weak peso, which increases the value of government bonds, will remain a challenge in the coming months.
Based on the 2026 Expenditure Budget and Financing Sources, the outstanding debt is expected to reach a record high of P19.06 trillion by the end of 2026, or P13.28 trillion in domestic obligations and P5.78 trillion in external debt. The Marcos administration plans to borrow P2.68 trillion this year, or P2.05 trillion from the domestic market and P627.1 billion from foreign sources.
The government expects the debt to GDP ratio to reach 61.8% this year, 61.3% in 2027, 60.3% in 2028, 59.5% in 2029, and 58% by the end of 2030.
