Slower Q2 growth, rising debt push PH debt-to-GDP ratio past int’l safety threshold

The Philippine national debt ratio surged to a three-decade high of 66 percent of gross domestic product as of end-June 2026, breaking past the internationally accepted manageable limit of 60 percent.

Data from the Bureau of the Treasury (BTr) shows that the sovereign debt metric reached its highest mark since recording 66.9 percent in 1993, climbing from 65.2 percent in the first quarter of the year and 63.2 percent in 2025.

The expanding debt burden coincided with a sharp economic deceleration, as second-quarter GDP growth moderated to 2.3 percent, marking the lowest output since 2009 outside the pandemic contraction.

Waning business and household spending amid an ongoing flood control corruption probe and elevated global energy costs pull first-half economic expansion down to 2.6 percent.

This growth pace fell below the government’s adjusted annual target range of 3.5 percent to 4.5 percent.

Meanwhile, total outstanding obligations of the national government climbed to a record of P19.065 trillion at the close of June following increased domestic and foreign borrowings.

Rizal Commercial Banking Corp. chief economist Michael Ricafort noted that exceeding the 60 percent standard creates an urgent need to narrow the fiscal deficit through stricter revenue collection, anti-corruption checks, and spending discipline.

“New and higher taxes could still be considered, as a final option, alongside other tax and fiscal reform measures,” Ricafort said, adding that accelerating broader economic growth remains vital to lowering the ratio.

Economic managers under the Marcos administration maintain a target to reduce the debt-to-GDP ratio below 60 percent by 2028.

The country previously maintained a historic low debt ratio of 39.6 percent in 2019 prior to the onset of the COVID-19 pandemic.