The Philippines is grappling with a significant increase in its government debt, which reached a staggering P14.24 trillion in July, signifying a 10% surge compared to the same month last year. While this surge is a cause for concern, there is a silver lining in the form of peso appreciation against the US dollar, which has provided some relief.

Government Debt Breakdown

Approximately 68.9% of this colossal debt originated from domestic sources, indicating that a significant portion of the country’s obligations is homegrown. The remaining 31.1% of the debt came from external creditors, highlighting the Philippines’ reliance on both domestic and foreign borrowing.

One promising development is the debt-to-GDP ratio, which improved to 61% as of end-June 2023, down from 62.1% a year ago. This metric is vital for evaluating a country’s debt sustainability, and maintaining it below 60% is often recommended by credit rating agencies to ensure manageability and sustainability.

Domestic Debt on the Rise

In July, domestic government debt witnessed an 11% increase, reaching P9.81 trillion compared to the previous year’s P8.83 trillion. This substantial rise can be attributed to the issuance of government bonds, which helped the government meet its financial requirements.

However, this acceleration in domestic debt was partially offset by the impact of the Philippine peso’s appreciation against the US dollar on foreign currency-denominated securities held domestically. Despite this challenge, the domestic borrowing spree continued.

Foreign Debt Dynamics

Foreign debt, on the other hand, amounted to P4.43 trillion in July, marking a 9% increase from the same month in the previous year when it stood at P4.05 trillion. While the foreign debt level increased year-on-year, it saw a slight dip of 0.3% compared to June’s figure of P4.44 trillion.

This decrease can be attributed to the positive impact of peso appreciation against the US dollar, amounting to a substantial P42.87 billion. This appreciation more than offset the P9.97 billion net impact of third-currency fluctuations against the US dollar and the P19.81 billion net availment of foreign loans.

Exchange Rate Dynamics

The average exchange rate between the US dollar and the Philippine peso in July stood at 54.834, demonstrating the peso’s strength. This exchange rate was notably stronger than both the 55.322 recorded in the same month the previous year and the 55.368 from June. The appreciation of the peso against the US dollar played a crucial role in mitigating the increase in foreign debt.

Future Projections

Looking ahead, the Marcos administration anticipates that the national government’s total outstanding debt will continue to climb, reaching P15.842 trillion in 2024. This projection represents an 8.3% increase from this year’s program of P14.623 trillion. While this forecast may raise concerns about the country’s fiscal health, it is essential to consider the broader economic context and the government’s strategies to manage and sustain its debt burden.


The Philippines faces a substantial government debt burden, with the total debt reaching P14.24 trillion in July. However, the country benefits from peso appreciation against the US dollar, which helps alleviate some of the debt pressure. As the government continues to navigate this financial challenge, maintaining a balanced approach to domestic and foreign borrowing and monitoring the debt-to-GDP ratio will be crucial in ensuring a stable and sustainable fiscal future.