The Market Monitor Minding the Nation's Business
The Department of Finance (DOF) assured that the government is effectively managing the national debt it inherited from the previous administration by sustaining strong economic growth and implementing prudent fiscal policies.
In a statement released Thursday, the DOF said the P16.75 trillion national debt as of end-April 2025 remains relatively low compared to other Asian economies. Japan tops the list with P485.94 trillion in debt, followed by Singapore at P53.68 trillion, South Korea at P46.89 trillion, Indonesia at P31.37 trillion, and Thailand at P17.73 trillion.
When the Marcos administration took office in 2022, it inherited P12.79 trillion in outstanding debt. The surge in debt under the previous administration was largely driven by pandemic-related expenditures, which amounted to P6.84 trillion, surpassing the combined borrowings of all past governments.
Despite this challenge, the DOF reported that the current administration has lowered the debt-to-GDP ratio to 60.7% in 2024, putting the country on track to reduce it further below the 60% international threshold by the end of President Marcos’ term.
With the economy projected to grow to P36.8 trillion by 2028, the DOF said the debt level will remain within sustainable bounds.
A large portion of the debt remains domestically sourced, which, according to the DOF, allows interest payments to stay within the local economy.
Under Finance Secretary Ralph Recto, the Bureau of the Treasury is implementing an 80:20 borrowing mix in favor of domestic sources to support the local capital markets and minimize foreign exchange risks.
The government’s strong revenue performance is also supporting debt sustainability. Tax collections for the first four months of 2025 hit P1.43 trillion, up 11.49% year-on-year. These collections are helping fund key development programs without the need to impose new taxes.
The DOF said continued adherence to fiscal discipline has contributed to recent credit rating improvements. Japan’s Rating and Investment Information Inc. (R&I) upgraded the country’s rating to A-, while S&P Global revised its outlook on the Philippines to positive.
“These developments reflect rising investor confidence in the Philippine economy, leading to lower borrowing costs and greater demand for Philippine bonds,” the DOF said.
It emphasized that these borrowings are reinvested in growth-enhancing sectors like infrastructure, health, education, agriculture, and social services—creating jobs and supporting inclusive development.