Government liabilities relative to the country’s economic output climbed to levels unseen since the early 1990s, according to figures covering the six months through June 2026.
The debt-to-GDP ratio—a gauge of what the national government owes measured against the size of the economy—reached 66% at the close of the second quarter. That figure marked an increase from 65.2% recorded in the January-to-March period and stood well above the 63.2% posted for 2025. It also represented the steepest reading since 1993, when the measure touched 66.9%, and breached the 60% ceiling that economists generally regard as sustainable.
Actual borrowings told a similar story. The national government’s outstanding debt swelled to an unprecedented P19.065 trillion by the end of June, a jump attributed chiefly to expanded borrowing from both local and foreign sources to bankroll development spending.
Growth, meanwhile, faltered. Gross domestic product—the combined value of goods and services produced—expanded just 2.3% between April and June, the feeblest quarterly showing since 2009 outside the pandemic period, when output rose 1.8%. Cautious spending by households and investors, weighed down by fallout from the flood control corruption scandal and by fuel-price spikes tied to turmoil in the MiddEast, held first-half expansion to 2.6%. That pace trailed the administration’s lowered full-year goal of 3.5% to 4.5%.
Rizal Commercial Banking Corp. chief economist Michael Ricafort, writing in a commentary, argued that a ratio sitting “above the international threshold of 60%” demands sharper focus on shrinking the budget deficit. He pointed to stronger tax collection paired with tighter, cleaner spending as the route forward.
Ricafort did not rule out fresh levies. “New and higher taxes could still be considered, as a final option, alongside other tax and fiscal reform measures, just like 20 years ago when the ratio was above 70%, though faster economic/GDP growth needed also to broaden the base/denominator of the ratio, to also eventually bring it lower/better towards the international threshold of 60% to help sustain relatively favorable credit ratings of the country at 1-3 notches above the minimum investment grade as maintained despite the COVID-19 pandemic, in an effort to help keep the country’s borrowing costs lower and at better payment terms,” he wrote. He tied those steps to a broader aim: “To improve and make fiscal and debt management more sustainable over the long-term and help create a more conducive environment for sustainable economic growth and development also over the long-term and for future generations,” he said.
Officials under President Ferdinand Marcos Jr. have set their sights on pulling the ratio back below 60% by 2028—a target that looks distant against the backdrop of 2019, when the same measure sank to a record low of 39.6% just ahead of the pandemic.
