MANILA, Philippines — The Philippines’ debt-to-GDP (gross domestic product) ratio is expected to remain above the internationally recognized 60-percent “sustainability” threshold over the medium term. According to a report by the Congressional Policy and Budget Research Department (CPBRD) released on Thursday, May 14, 2026, a “double whammy” of oil-driven inflation and stagnant economic growth has significantly altered the country’s fiscal trajectory.
The CPBRD projects that the debt-to-GDP ratio could climb to 63.8 percent by the end of 2026, up from 63.2 percent at the close of 2025.
The report identifies several factors that are “tilting” the debt dynamic away from the government’s post-pandemic normalization path:
- Oil-Driven Inflation: Surging global oil prices—linked to ongoing geopolitical tensions—have acted as a “tax” on consumer spending, which accounts for roughly 80% of the Philippine economy.
- Weakened GDP Growth: The local economy’s first-quarter growth slowed to 2.8 percent, missing consensus estimates. The CPBRD noted that achieving the government’s 5% to 6% growth target for the year appears increasingly unlikely.
- Fresh Debt Record: As of end-March 2026, the National Government’s outstanding debt hit a new record of ₱18.49 trillion. This represents 97% of the administration’s programmed ₱19.06-trillion debt ceiling for the entire year.
- Currency Valuation: The depreciation of the Philippine Peso (which closed at ₱60.75 to the dollar in late March) has mechanically increased the peso value of the country’s foreign-currency obligations.
The elevated debt levels mean the Philippines is currently off-track regarding the targets set in its Medium-Term Fiscal Framework (MTFF).
| Metric | MTFF Goal (2026) | CPBRD/Current Status |
| Debt-to-GDP Ratio | 56.6% | 65.2% (as of Q1 2026) |
| GDP Growth | 5.0% – 6.0% | 2.8% (Actual Q1) |
| Total Debt Ceiling | ₱19.06 Trillion | ₱18.49 Trillion (Current) |
The persistent debt profile has already prompted “debt watchers” to flag the Philippines’ fiscal health, leading to a recent downgrade in their outlook.
- “A” Rating Hurdle: Observers suggest that the rising debt-to-GDP ratio makes the administration’s goal of securing an “A” credit rating significantly more difficult to achieve in the near term.
- Borrowing Space: Despite the record debt, Finance Secretary Frederick D. Go maintained that the government still has “room to leverage” if needed to cushion the economy, noting that the World Bank’s standard gauge for a sustainable threshold is 70%.
The CPBRD report also alluded to a “lingering fallout” from a massive graft scandal that rocked the nation in late 2025. This, combined with the current energy crisis and the “hot pursuit” of Senator Ronald “Bato” Dela Rosa at the Senate, has created a climate of political and economic uncertainty that continues to weigh on investor confidence.
“These shocks have shifted the debt-to-GDP trajectory away from the original MTFF normalization path and toward a higher and more persistent debt profile.” — Congressional Policy and Budget Research Department (CPBRD)
