Debt-to-GDP ratio hits 22-year high in June

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August 8, 2026 | 12:00am

MANILA, Philippines — The share of national government debt to gross domestic product (GDP) breached a 22-year high of 66 percent as of end-June, raising concerns that weak growth and sluggish investment could complicate efforts to pare down the country’s debt stock.

Data from the Bureau of the Treasury (BTr) showed that the country’s debt level, when measured against gross domestic product (GDP), increased from 65.2 percent in end-March.

This was the highest level since the 71.6 percent seen in end-2004.

UnionBank chief economist Ruben Carlo Asuncion said the 66-percent debt-to-GDP ratio warrants close monitoring, but it “remains manageable” provided economic growth recovers and fiscal consolidation remains on track.

“The increase reflects not only the government’s financing requirements but also the slower pace of economic growth,” Asuncion said.

He also said that the weaker-than-expected GDP growth of 2.3 percent in the second quarter likely contributed to the higher ratio, as slower economic expansion mechanically raises debt relative to GDP.

“The more important question is whether the economy can grow fast enough to stabilize and eventually reduce the debt burden over time. Debt becomes more difficult to manage when growth remains weak, revenues underperform or borrowing costs rise significantly,” Asuncion said.

The increase came after the national government’s outstanding debt logged a new record high of P19.07 trillion at end-June, up by 2.8 percent from P18.55 trillion in end-May. This already surpassed the P19.06-trillion year-end projection.

“The Philippines continues to benefit from a relatively deep domestic funding market and access to external financing. However, the latest debt ratio suggests that fiscal space is becoming more constrained, which means policymakers will need to carefully balance growth-supportive spending with fiscal consolidation objectives,” he added.

Treasury data showed  that domestic debt still accounts for the lion’s share of the debt stock at 67.3 percent, while the rest came from external sources.

Domestic debt rose by 2.7 percent to P12.84 trillion at end-June, while external debt inched up by 2.9 percent to P6.23 trillion.

With this, Asuncion said the “most sustainable way” to improve the debt-to-GDP ratio is through stronger economic growth.

However, Asuncion warned that slower economic growth and softer investment activity could make debt reduction more difficult over time, highlighting the need to boost the economy’s growth drivers.

Reyes Tacandong & Co. senior adviser Jonathan Ravelas said debt is no longer just a fiscal issue and is becoming a growth issue.

“Without a credible plan to expand revenues, improve spending efficiency and accelerate private sector investment, the burden of today’s debt will increasingly be passed on to future generations,” Ravelas said.

Under the Philippine Development Plan 2023-2029 Midterm Update – Results Matrices released on May 20, the Marcos administration expects the debt-to-GDP ratio to be 60 to 63 percent this year, 59 to 62 percent in 2027 and 58 to 61 percent in 2028.