PH Debt Servicing to Increase to P877B in 2025 Due to Maturing Loans

The Philippines is set to allocate a significant portion of its budget to debt servicing in 2025, primarily due to the maturity of loans taken during the COVID-19 pandemic and the depreciation of the Philippine peso, the Department of Budget and Management (DBM) announced.

According to the proposed National Expenditure Program (NEP), the country will spend P876.7 billion on debt payments next year, which constitutes 13.8% of the P6.352 trillion national budget for 2025.

Reasons for Increased Debt Servicing

DBM Secretary Amenah Pangandaman explained that the increase is largely due to the maturity of pandemic-era loans and fluctuations in foreign exchange rates and interest rates. “Most of the loans we took during the pandemic have now matured, and the forex and interest rates have been high,” she noted during a press conference in Manila.

As of the end of May, the government’s outstanding debt was recorded at P15.347 trillion, marking a 2.2% increase from April’s P15.017 trillion, according to the Bureau of the Treasury (BTr).

Budget Allocation for 2025

The 2025 budget proposal includes:

• P2.121 trillion for social services
• P1.853 trillion for economic services
• P1.083 trillion for general public services
• P1.419.3 billion for defense
• P876.7 billion for debt servicing

This budget represents a 10.1% increase from the 2024 budget of P5.768 trillion and is equivalent to 22.1% of the country’s GDP. Notable budget increases have been allocated to the Departments of Transportation, Education, Interior and Local Government, National Defense, Agriculture, Finance, Foreign Affairs, Agrarian Reform, Justice, Information and Communications Technology, Science and Technology, and Environment and Natural Resources.