MANILA — The Philippines is projected to see a slight easing of its debt burden relative to economic output this year, though persistent revenue challenges continue to constrain the nation's fiscal health, according to a new regional assessment.
The ASEAN+3 Macroeconomic Research Office (Amro) forecasts the country's debt-to-GDP ratio will decline to 62.8% in 2026, down from 63.2% in 2025. While this represents modest improvement, the level remains above the 60% threshold widely monitored by economists and investors. As of late February, the national debt had already climbed to a record ₱18.16 trillion.
"Fiscal positions in ASEAN+3 economies have yet to fully normalize as the pace of fiscal consolidation has moderated," Amro noted in its latest fiscal policy report.
Economists caution that achieving this projected decline hinges heavily on growth prospects, particularly after the economy expanded by just 4.4% last year.
"On the supportive side, strong GDP growth, improving revenues, and a gradual narrowing of the deficit can help bring the ratio down," said John Paolo Rivera, senior research fellow at the Philippine Institute of Development Studies. "Nominal growth, in particular, plays a key role in reducing the debt burden relative to the size of the economy."
However, Rivera added that "risks come from slower growth, higher borrowing needs, and external shocks such as elevated oil prices or global volatility, which could widen the deficit or increase financing costs."
Alongside the easing debt ratio, gross financing needs are also projected to decline to 8.8% of GDP in 2026 from 10.1% in 2025. Yet Amro warned that higher principal repayments on maturing debt and sustained interest burdens could continue to pose fiscal risks.
Jonathan Ravelas, senior adviser at Reyes Tacandong & Co., highlighted concerns about fiscal discipline: "The risk is fiscal slippage—especially if spending overruns persist or growth softens. Higher-for-longer interest rates also raise the cost of carrying debt. The trajectory is encouraging, but markets will judge whether this reflects real fiscal discipline or just favorable growth math."
A persistent weak spot remains revenue performance, projected at just 15.9% of GDP in 2026—unchanged from 2025 and ranking as the fourth lowest among ASEAN+3 economies. Amro previously flagged the country's revenue performance as structurally weak, citing delays in implementing key tax reform measures.
The report concludes that while the Philippines shows gradual improvement across several fiscal indicators, meaningful progress requires addressing underlying revenue challenges alongside careful management of growth and spending priorities.