Philippines' Fiscal Situation 'Under Control' Despite High Debt Repayment Ratio

With the Philippines being flagged for spending over 10 percent of its income on debt repayments in 2023, the Department of Finance (DOF) stated that the fiscal strain from increasing debt payments is under control.

DOF Secretary Ralph G. Recto mentioned that the government is managing the situation by reducing the deficit annually while growing the economy.

National Treasurer Sharon P. Almanza also stated that the country's debt burden remains manageable and is expected to improve with the government's commitment to fiscal consolidation.

According to the Asian Development Bank Institute (ADBI), debt repayments in developing economies post-pandemic have been increasing, affecting funding for public goods and services.

ADBI reported that debt servicing in developing countries in the Asia-Pacific region absorbed an average of 10.33 percent of government budgets from 2020 to 2023.

The Philippines, along with other countries, had debt service ratios exceeding 10 percent, leading to challenges in government expenditures.

ADBI highlighted the Philippines' progress in achieving the UN's Sustainable Development Goals (SDGs) at 53 percent and described the country's risk from debt and climate hazards as 'moderate.'

Recent data from the Institute of International Finance (IIF) showed that the Philippines' debt servicing budget averaged 6.2 percent of GDP from 2022 to 2024, impacting sectors like education and health.

The Philippines is set to repay a record ₱2.05 trillion in debt this year, with principal amortization exceeding ₱1.2 trillion and interest payments over ₱848 billion.

Despite a decline in debt payments in the first five months of the year, the national government's outstanding debt reached a new high of ₱16.92 trillion in May.