The Philippine government’s outstanding debt is “sustainable and manageable,” Finance Secretary Ralph Recto said, citing the country’s improving debt metrics and rising revenue collections.
Recto said the country’s total debt stood at P16.05 trillion at the end of 2024, a figure he said was lower than those of neighboring countries. By the end of June 2025, the debt grew to a record P17.27 trillion, an 11.5 percent year-on-year increase.
Speaking at a forum organized by the Economic Journalists Association of the Philippines, Recto said 69.2 percent of the country’s outstanding debt is domestic, ensuring that a majority of interest payments return to the local economy.
About 90.8 percent of the total debt portfolio has fixed interest rates and 82.2 percent has long-term tenors, which insulates the country from sudden increases in debt payments due to higher global interest or exchange rates.
“We will continue to adopt an 80:20 borrowing mix in favor of local sources to take advantage of domestic liquidity and mitigate foreign exchange risks. At the same time, we will make sure that the economy will continue to outgrow the country’s debt, said Recto.
Michael Ricafort, chief economist at Rizal Commercial Banking Corp. (RCBC), said the national government’s debt-to-GDP ratio remains manageable at 63.1 percent, similar to the 63.7 percent ratio three years ago.
“So far, global credit rating agencies have not yet been concerned and maintained the favorable credit ratings at 1-3 notches above the minimum investment grade ratings since the pandemic started five years ago,” Ricafort told the Manila Standard.
However, he noted that it would be better to bring the ratio below the 60 percent international threshold. To achieve this, he cited the need for narrower budget deficits through anti-wastage and fiscal reform measures, including the “right-sizing” of the government.
He also suggested “intensified tax collections based on existing tax laws” and “running after tax cheats.”
“If all else fails in terms of bringing down the NG debt-to-GDP ratio to more acceptable levels… new taxes and/or higher tax rates, as the final option/alternative,” Ricafort said.
Rising collections
Speaking at a budget briefing in Congress, Recto said the government’s revenue collections are on track to reach P7 trillion by 2030, led by aggressive tax collection efforts and new fiscal reforms.
Total revenues are projected to grow by an average of 10.2 percent annually from 2025 to 2028, hitting nearly P6 trillion by the end of President Marcos’s term.
“By 2030, our total revenues will hit P7 trillion,” he said, adding that this requires the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC) “to work harder and boost efficiency at a faster pace.”
Recto said the projections include additional revenues from recently enacted laws, such as the VAT on digital services and the Capital Markets Efficiency Promotion Act.
He cited the government’s strong revenue performance, with collections growing by an average of 13.8 percent annually over the last three years. In 2024, the government achieved a revenue effort of 16.7 percent, the highest in 27 years.
“We are also on course to meet our fiscal program for the year, having already achieved half of our targets. As of mid-year, our tax collections continued to post double-digit growth, totaling P2.03 trillion. This is 10.7 percent higher than last year,” said Recto.
The finance chief said this robust performance has placed the Philippines among Asia’s top countries for revenue-to-GDP ratios. The government also expects additional revenues from the soon-to-be-enacted Rationalization of the Mining Fiscal Regime Act and is exploring a possible General Tax Amnesty this year.
With higher revenue collections and improved spending management, the government’s fiscal deficit is projected to drop from a pandemic high of 8.6 percent in 2021 to 5.5 percent in 2025 and to about 4 percent by 2028. It is expected to fall further to around 3 percent by 2030.
“Crucial to this is ensuring that we prevent wasteful expenditures,” he said.
Recto cited the government’s support for President Marcos’s directive to “closely scrutinize the national budget” and ensure that projects funded in the 2026 National Expenditure Program have the highest “multiplier effect.”
The government is allocating 5 percent to 6 percent of GDP for infrastructure spending, 4 percent for education and roughly 4 percent for health, agriculture and social welfare.
If the government adheres to its Medium-Term Fiscal Program and maintains disciplined spending, the Philippine economy is projected to reach P42.6 trillion by 2030, while keeping the country’s debt at P24.7 trillion, equivalent to 58 percent of GDP.
He said the country’s debt metrics are improving and are “relatively lower than that of most countries in Asia,” citing Japan, Singapore, South Korea, Indonesia and Thailand as examples with higher debt levels.
