Shift toward peso financing limits external exposure; fiscal space narrows as obligations near full-year ceiling
MANILA — The Philippines’ national government debt rose to a record P18.16 trillion at the end of February 2026, according to data released by the Bureau of the Treasury, marking a 0.14 percent increase from January and bringing total obligations close to the government’s P19.06 trillion program for the year. The Treasury has yet to release end-March figures, making February the latest available data point.
The latest figures reflect a continued policy preference for domestic financing, as authorities seek to manage exposure to global market volatility and foreign exchange risks.
Domestic borrowing anchors debt mix
Domestic debt climbed to P12.48 trillion, up 1.3 percent month on month, accounting for 68.7 percent of total outstanding obligations. Treasury data show the increase was driven by new issuances of government securities used to support public spending and development programs.
The heavier reliance on peso-denominated instruments aligns with the government’s medium-term strategy to stabilize debt servicing costs and reduce sensitivity to external rate movements.
External debt eased by valuation effects
External debt declined to P5.68 trillion, down 2.2 percent, largely due to favorable foreign exchange movements that reduced the peso value of foreign-denominated obligations. Treasury data indicate these valuation gains offset new external borrowings during the period.
The month-on-month decline reflects currency effects rather than structural reductions in foreign liabilities.
Upward trend persists year on year
Despite the marginal monthly increase, the broader trajectory remains upward. Total debt has risen from P16.63 trillion in February 2025, representing roughly a 9 percent year-on-year increase.
The Bureau of the Treasury has maintained that the country’s debt position remains “stable and well-managed,” citing continued access to both domestic and international financing, including recent activity in the global bond market.
Risks and contingent liabilities
Economists have pointed to external pressures that could complicate fiscal consolidation, including geopolitical uncertainty and exchange rate volatility, with the peso at times weakening toward the ₱60-per-dollar level.
Treasury data also showed an increase in guaranteed obligations, including exposures tied to the Power Sector Assets and Liabilities Management Corp. (PSALM), adding to the government’s contingent liabilities.
Limited headroom ahead
With total debt nearing the P19 trillion threshold, fiscal space for the remainder of 2026 is increasingly constrained. The pace of government spending and the cost of servicing existing obligations are expected to remain central to the country’s credit outlook.
