Fixed interest rates cover 90 percent of the Philippines’ outstanding obligations, a structure Finance Secretary Frederick Go presented Monday as central to why the country’s borrowing remains manageable even as officials push to shrink the budget gap.
Go laid out the assessment before the House committee on appropriations, which was reviewing financing sources, spending levels, and budget proposals across government departments, agencies, and state-run corporations.
The bulk of the country’s debt, he said, sits at home. Domestic borrowing accounts for 67.3 percent of the total, which Go said limits the government’s exposure to currency swings while feeding the growth of the local capital market. He tied this to a broader borrowing approach he credited to the Bureau of the Treasury.
“More importantly, on our debt, we have maintained a prudent debt mix: predominantly domestic debt, predominantly carrying fixed interest rates, and predominantly structured with long repayment terms,” Go said.
The fixed-rate share, he explained, locks in servicing costs and insulates the government from abrupt movements in global rates. Repayment timing works similarly in the government’s favor: 84.1 percent of the debt carries long-term maturities, leaving years before the obligations come due.
“This longer maturity profile reduces our refinancing risks and gives us greater predictability in managing our debt obligations,” Go said.
“This strategic borrowing mix by our Bureau of Treasury strengthens our resilience to external shocks and makes our debt obligations more predictable and manageable over the long term,” he added.
On the headline numbers, Go reported national government debt at 63.2 percent of gross domestic product for 2025, with general government debt at 56.8 percent. He placed that below the World Bank’s 70 percent sustainability threshold and described it as within a manageable range against other emerging economies, citing Myanmar at 51.9 percent, Indonesia at 41 percent, and Cambodia at 26.5 percent.
The deficit picture, according to Go, has been the driver keeping those debt levels in check. He pointed to a fiscal shortfall of 5.6 percent last year, down from 8.6 percent in 2021, 7.3 percent in 2022, and 5.7 percent in 2024.
“And we continue to make progress this 2026, despite the economic shocks that we have faced, including those arising from the conflict in the Middle East,” he said.
The first half of 2026 brought the deficit-to-GDP ratio to 5.46 percent, Go said, a slight improvement over the 5.65 percent logged in the same stretch of 2025. He projected 5.44 percent for the back half of the year.
“We remain on track to meet our fiscal deficit target for 2026,” Go said.
“[This would bring] the full year to 5.45 percent, our lowest deficit-to-GDP ratio since the start of the administration,” he said.
Those projections run against a rising debt stock. The Department of Budget and Management has said outstanding national government debt is set to reach a record P21.479 trillion by the close of 2027. The figure stood at P19.07 trillion as of June this year.
