The Philippines’ sovereign debt could surge to P20 trillion by the end of President Ferdinand Marcos Jr.’s term in 2028, according to Finance Secretary Ralph Recto.
At the Kapihan sa Manila Bay news forum, Recto emphasized that the country’s economic growth is expected to outpace the increase in national debt. “By 2028, the Philippines’ debt could reach roughly P20 trillion… The economy, on the other hand, might be at P37 trillion by 2028,” Recto stated. He explained that this growth would result in higher incomes and more jobs for Filipinos.
Recto noted that about 70% of the country’s debt would be sourced domestically, alleviating concerns about the rising debt levels. “You should not worry as this debt is sourced domestically,” he reassured.
As of the end of June 2024, the Philippines’ debt stood at P15.48 trillion, a 9.4% increase from P14.15 trillion the previous year. Of this total, 68.29% was domestically sourced, while 31.71% came from external sources.
Despite the projected increase in debt, Recto maintained that it aligns with the administration’s goal of reducing the debt-to-GDP ratio to below 60% by 2028. “Yes, it could be more or less 57% [of GDP],” he said, adding that the current target is 56%.
The debt-to-GDP ratio measures the national government’s outstanding debt relative to the economy’s value during a specific period. A lower ratio indicates better capability to pay off debt without negatively impacting the economy.
“The debt-to-GDP ratio of the Philippines has gradually declined since the pandemic, from 60.9% in 2022 to 60.1% in 2023,” Recto highlighted. This decline follows an increase to 60.5% in 2021 due to the pandemic response efforts, up from 54.6% in 2020 and a pre-pandemic low of 39.6% in 2019.
Recto reiterated the government’s commitment to further reducing the debt-to-GDP ratio, ensuring a buffer for future crises. He also stressed that the government is leveraging debt to drive economic recovery through investments in infrastructure and human capital development projects, which have substantial multiplier effects on the economy.