Philippines Debt Burden Reaches 33-Year High at 66% of GDP in H1 2026

The Philippines' national debt burden has ballooned to its highest level in approximately 33 years, reaching 66% of the Gross Domestic Product (GDP) in the first half of 2026. This marks a significant increase, surpassing the internationally recognized manageable threshold of 60%. As of the end of June 2026, the country's debt-to-GDP ratio stood at 66%, up from 65.2% in the first quarter of the year and 63.2% in 2025. This is the highest ratio recorded since 1993, when it reached 66.9%. The economy, measured by GDP, experienced slower growth, expanding by only 2.3% in the second quarter of 2026. Excluding pandemic years, this is the weakest quarterly growth since 2009. Factors contributing to this slowdown include subdued investor and consumer sentiment, partly due to the lingering effects of the flood control corruption scandal, and inflationary pressures from global fuel price shocks stemming from the Middle East crisis. Consequently, the first-half economic growth was 2.6%, falling short of the government's revised annual target of 3.5% to 4.5%. The national government's outstanding debt reached a record P19.065 trillion by the end of June, primarily driven by increased domestic and external borrowings to finance national development projects. Michael Ricafort, chief economist at Rizal Commercial Banking Corp., commented that the debt-to-GDP ratio exceeding the 60% international threshold necessitates greater urgency in narrowing the national government's budget deficit. He emphasized the need for intensified tax revenue collection and more disciplined government spending, including anti-leakage, anti-wastage, and anti-corruption measures. Ricafort also suggested that new and higher taxes could be considered as a last resort, similar to measures taken 20 years ago when the ratio was above 70%. He stressed that faster economic/GDP growth is also crucial to broaden the ratio's denominator and bring it down towards the 60% mark, thereby helping to sustain the country's favorable credit ratings and keep borrowing costs lower. President Ferdinand Marcos Jr.'s economic managers aim to reduce the debt-to-GDP ratio to below 60% by 2028. Prior to the COVID-19 pandemic, the Philippines' debt-to-GDP ratio was at a record low of 39.6% in 2019. Source: GMA Money Philippines