Borrowings invested in growth initiatives, welfare
Malacañang on Monday assured the public the national government’s nearly P17 trillion debt remains within sustainable levels, saying the borrowed funds were channeled into “growth-enhancing” investment and social protection programs.
Citing the Department of Finance (DOF), Palace Press Officer Claire Castro said the country’s P16.92 trillion outstanding debt as of end-May — equivalent to a 62 percent debt-to-GDP ratio — remains well below the internationally accepted threshold of 70 percent.
“According to our Department of Finance, it is sustainable,” Castro said in a Palace briefing. “We are still within that range.”
She said President Ferdinand Marcos Jr.’s administration has directed borrowings to long-term infrastructure, education, agriculture, health and cash aid to vulnerable sectors.
Current level ‘manageable’
John Paolo Rivera, senior research fellow at the Philippine Institute for Development Studies, agreed the current debt level remains manageable — provided the economy keeps growing at a healthy pace and borrowings fund productive, high-impact spending.
“Sustainability hinges not just on the debt’s size, but on how it’s composed and used,” Rivera said. “It becomes risky when debt servicing starts crowding out essential development spending or when growth fails to keep up with rising obligations.”
He added that maintaining investor confidence, improving revenue collection, and focusing on targeted, high-impact spending are critical to keeping debt on a sustainable path.
Reinielle Matt Erece, economist at Oikonomia Advisory & Research Inc., said borrowing to finance deficits can be justified if it leads to productivity and growth.
“So far, we’re doing relatively well compared with neighboring economies,” he said.
He cautioned, however, that debt becomes problematic “if growth doesn’t lead to better revenue generation or if public spending becomes the main growth driver instead of household demand, investment, or trade.”
Domestic borrowings dominate
The Bureau of the Treasury (BTr) said last week that domestic borrowings accounted for 69.6 percent of the total debt as of May.
External obligations accounted for 30.4 percent.
This debt composition is seen reducing foreign exchange risk and supporting local capital markets.
Domestic debt rose to P11.78 trillion, driven by nearly P191 billion in net issuances. External debt, meanwhile, slipped by 0.46 percent to P5.14 trillion, due to net repayments and revaluation gains from the stronger peso.
The BTr said the government remains committed to a “prudent debt management strategy”, ensuring borrowings are aligned with fiscal objectives and macroeconomic stability.
Debt payments from January to May dropped by 42.22 percent to P702.97 billion, largely due to a steep 61.39 percent decline in amortization, the Treasury added.
