The Philippines has the smallest debt burden from state-owned enterprises (SOEs) among six major Asia-Pacific emerging markets, according to a Fitch Ratings report.
Fitch said the country's SOE debt relative to gross domestic product (GDP) stood at just 1.1 percent, far lower than in Indonesia, Thailand, India, Malaysia, and China. Explicitly guaranteed debt—where the government is legally obliged to repay if an SOE defaults—was recorded at 1.5 percent.
In the Philippines, SOEs are known as government-owned and controlled corporations (GOCCs). Fitch noted that many SOEs in emerging markets are inefficient or loss-making due to social mandates, requiring government support.
Subsidies to GOCCs have declined since the pandemic, reflecting tighter fiscal management. By 2025, subsidies fell to below 0.5 percent of GDP, among the lowest in Southeast Asia. Budgetary support dropped 22.9 percent to P106.9 billion in 2025 from P138.7 billion in 2024, the lowest since 2016.
The Department of Budget and Management (DBM) has imposed stricter controls, including "hard budget constraints" on GOCCs under the 2025 national budget. However, for 2026, the government has earmarked P264.82 billion for GOCCs, more than double the P127.43 billion programmed for 2025.
The DBM said it will flag GOCCs that have remained highly dependent on subsidies for at least 10 consecutive years, subjecting them to mandatory institutional review. "The FY 2027 budget aims to intensify optimization of budgetary support to GOCCs in response to the call to reform the public corporate sector in light of tight fiscal resources," the DBM stated.