Debt-to-GDP ratio rises to 11-year high in Q1

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May 8, 2026 | 12:00am

MANILA, Philippines — The share of national debt (NG) to gross domestic product (GDP)  rose to 65.2 percent in the first quarter, a level analysts view as manageable but under pressure from the ongoing conflict in the  Middle East.

Latest  data from the Bureau of the Treasury (BTr)   showed the country’s debt-to-GDP ratio rose to 65.2 percent at end-March from 63.2 percent at end-2025, marking the highest annual level since it hit 65.7 percent in 2005.

The increase came after the national government (NG)’s outstanding debt hit a fresh high of P18.49 trillion in March, driven largely by the   peso‘s  weakening against the dollar and higher domestic borrowings.

Ser Percival Peña-Reyes, director of the Ateneo Center for Economic Research and Development, said the country’s latest debt-to-GDP ratio was above the 60 percent prudential benchmark for emerging economies, but “does not automatically mean a debt crisis.”

However, the Department of Finance uses a 70 percent of GDP threshold, aligned with the International Monetary Fund, which uses general government (GG) debt rather than NG debt as reference.

The DOF has yet to release the 2025 and the first quarter of 2026 GG debt figures.

Data showed that GG debt-to-GDP  ratio reached 53.88 percent at end-2024, while the NG debt-to-GDP ratio hit 60.69 percent in the same year.

“Debt is still manageable for now, but it is probably not sustainable, unless growth improves and deficits narrow over time,” Peña-Reyes told The STAR.

The economy grew by 2.8 percent in the first quarter, slower than the three percent  expansion in the fourth quarter of  2025.   The latest performance marked the weakest first-quarter growth in five years, since the first three months of 2021, when GDP contracted by 3.8 percent.

Despite this, Peña-Reyes said what matters is whether the government can still pay interest without severe strain, refinance maturing debt, maintain investor confidence and grow the economy faster than debt accumulates.

Currently, the Philippines remains capable of doing these, but conditions are becoming tougher, he added.

Peña-Reyes also expects the debt-to-GDP ratio to further climb this year if the conflict in the Middle East persists or escalates.

“The key issue is not only the size of the debt stock itself, but the combination of slower economic growth, higher oil prices, elevated interest rates, and a weaker peso. All of these factors can mechanically worsen the ratio,” he said.

Meanwhile, Filomeno Sta. Ana III, coordinator of Action for Economic Reforms, said the debt-to-GDP ratio is bound to worsen amid rising expenditures and much slower growth brought by “not only by the global crisis but also by a self-inflicted crisis, as manifested by the massive corruption, wasteful expenditures and revenue erosion.”

To mitigate this, Sta. Ana said government’s public spending must be overhauled to eliminate waste and corruption, and to shift the focus to social protection, including pro-poor subsidies that promote long-term growth.

“The higher debt and higher expenditures are unavoidable at a time when the people are reeling from the crisis. But at the same time, we must have fiscal discipline,” he added.