By Aubrey Rose A. Inosante, Reporter

THE National Government’s (NG) outstanding debt edged up to a fresh high of P16.68 trillion as of end-March, the Bureau of the Treasury (BTr) said on Wednesday, adding that this debt “remains manageable.”

Latest data from the Treasury showed that the debt rose by 0.31% from P16.63 trillion at the end of February.

Year on year, outstanding debt went up by 11.78% from P14.93 trillion at end-March 2024.

“The NG’s robust revenue performance in the first quarter of 2025 has enabled the government to finance key priority programs without imposing new taxes, keeping debt growth well within sustainable levels,” the BTr said in a statement.

NG debt is the total amount owed by the Philippine government to creditors such as international financial institutions, development partner-countries, banks, global bondholders and other investors.

The bulk or 68.2% of the total debt stock came from domestic sources, while the rest were external borrowings.

“This financing mix reflects a prudent approach to debt management to help mitigate exposure to external risks while taking advantage of the country’s liquid domestic market,” BTr said.

Domestic debt, which was composed of government securities, rose up by 1.39% to P11.38 trillion at end-March from P11.22 trillion at end-February.

Year on year, it jumped by 10.72% from P10.28 trillion in the same period.

“This was mainly due to the net issuance of domestic securities worth P157.86 billion, demonstrating strong investor confidence in government instruments,” the BTr said.

However, the increase in domestic debt was partially offset by the peso appreciation against the US dollar, which reduced the overall valuation by P2.03 billion.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the higher debt in March partly reflected the widening budget deficit, which required additional borrowings by the government.

Oikonomia Advisory and Research, Inc. economist Reinielle Matt M. Erece said the rise in domestic debt reflected the high demand for government bonds, which continues to be oversubscribed.

“This is an indication of confidence in this asset and the risk-averse sentiment while waiting for major market catalysts,” he added.

Meanwhile, external debt dropped by 1.92% to P5.3 trillion as of end-March from P5.41 trillion at end-February.

However, it jumped by 14.12% from P4.65 trillion in March 2024.

“The (year-on-year) reduction was primarily due to the P66.22-billion decrease in the peso equivalent of US dollar-denominated debt behind local currency appreciation, as well as the net repayment of external loans, which further trimmed the external debt total by P60.84 billion,” the Treasury said.

“These more than offset the P23.19-billion upward revaluation effect of third-currency movements against the US dollar,” it added.

The peso closed at P57.21 against the dollar at end-March, appreciating by 78.5 centavos from its P57.995-per-dollar finish at end-February.

External debt was composed of P2.77 trillion in global bonds and P2.53 trillion in loans.

The NG’s guaranteed obligations slipped by 0.37% to P339.86 billion as of end-March from P341.11 billion in the previous month.

The Treasury attributed the monthly decline to the net repayment of external guarantees amounting to P1.29 billion and the P1.13-billion downward revaluation amid the continued appreciation of the peso versus the greenback.

“These more than offset the P0.77 billion in additional domestic guarantees and the P0.4- billion impact of third-currency exchange rate movements on external guarantees, reflecting the government’s continued efforts to prudently manage contingent liabilities while supporting key development initiatives,” it added.

Year on year, guaranteed obligations declined by 1.79% from P346.04 billion.

The BTr said that 91.5% of the debt stock had fixed interest rates, shielding the Philippines from abrupt shifts in global interest rates and currency movements.

It also noted that 81.3% of the obligations are long term, “giving the government ample fiscal space and time to support growth-enhancing investments.”

Mr. Ricafort said in the following months, the debt stock could hit a new fresh high due to the need to hedge both local and foreign borrowings because of the “Trump factor.”

This year’s financing program is set at P2.545 trillion, with 80% coming from local lenders and 20% from foreign sources.

The NG’s outstanding debt is projected to reach P17.35 trillion by end-2025.

“With the economy continuing to grow faster than its obligations, the country remains firmly on track to achieve fiscal consolidation and reduce the debt-to-GDP (gross domestic product) ratio to below 60% by 2028,” the BTr said.

Under the Medium-Term Fiscal Framework, the government seeks to bring the ratio down to 60.4% by the end of 2025, and to 56.9% by 2028.

“The Marcos administration has inherited a large debt due to the pandemic, amounting to approximately P12.79 trillion, but it has already made improvements to the country’s debt statistics by reducing the NG debt-to-GDP ratio to 60.7% in 2024, below the 70% international threshold,” the BTr said.

First-quarter GDP and debt-to-GDP ratio data will be released on May 8.

“Moreover, the country’s recent credit rating upgrades and reaffirmations underscore strong investor confidence in the country’s economic fundamentals, translating to greater demand for Philippine bonds, thereby preserving government access to reasonable borrowing costs, crucial for sustaining the country’s inclusive growth momentum,” the BTr said.

In late April, Fitch Ratings affirmed its “BBB” investment grade rating and “stable” outlook amid the country’s strong growth prospects and minimal exposure to trade tensions.