PH Manages Debt, Grows Economy Without New Taxes

The Philippine government continues to manage the large debt it inherited from the previous administration by accelerating economic growth and lowering the debt-to-GDP ratio to a sustainable level.

President Ferdinand Marcos Jr. assumed office in 2022 with a PHP 12.79-trillion debt stock carried over from the Duterte administration.

By the end of April 2025, the country’s total outstanding debt stood at PHP 16.75 trillion—still lower than that of several Asian neighbors.

Japan’s debt reached PHP 485.94 trillion, Singapore’s hit PHP 53.68 trillion, South Korea’s reached PHP 46.89 trillion, Indonesia’s amounted to PHP 31.37 trillion, and Thailand’s stood at PHP 17.73 trillion.

The Duterte administration added PHP 6.84 trillion in pandemic-related debt, outpacing the combined debt incurred by all six previous administrations.

Despite the substantial increase, the Department of Finance (DOF) has lowered the national government’s debt-to-GDP ratio to 60.7% in 2024 through sound fiscal management.

With the economy projected to expand to PHP 36.8 trillion by 2028, the country is on track to cut the debt-to-GDP ratio to below 60% before the end of Marcos Jr.’s term.

As of April 2025, domestic debt made up 69.2% of total obligations, while external debt comprised 30.8%, helping retain interest payments within the local economy.

Bureau of the Treasury (BTr) chief Secretary Ralph G. Recto has implemented an 80:20 borrowing mix in favor of local sources to support capital markets and reduce foreign exchange exposure.

In addition, 91.5% of the government’s borrowings are at fixed interest rates, insulating the country from global rate volatility.

Also, 81.3% of these borrowings are long-term, giving the government room to prioritize growth investments.

The DOF has boosted revenue performance through enhanced tax collection without introducing new taxes.

From January to April 2025, tax collections rose 11.49% to PHP 1.43 trillion, surpassing the 7.6% nominal GDP growth in the first quarter.

The Bureau of Internal Revenue (BIR) collected PHP 1.11 trillion in the first four months of the year, a 14.5% increase from 2024.

Meanwhile, the Bureau of Customs (BOC) brought in PHP 306.1 billion, up 2.16% year over year.

The fiscal deficit narrowed to 5.7% of GDP in 2024, improving from 6.2% in 2023, 7.3% in 2022, and a pandemic peak of 8.6% in 2021.

The deficit is forecast to shrink further to about 3.8% by 2028.

Fiscal discipline has led to a credit rating upgrade to A- from Japan’s R&I and a positive outlook from S&P Global.

“These upgrades signal investor confidence in our economic performance, reduce borrowing costs, and boost demand for Philippine bonds,” the DOF said.

The government reinvests borrowings into infrastructure, education, agriculture, health care, and social services to generate jobs and long-term growth.