PH Debt Hits ₱16.75T in April Despite Strong Peso
2 min read
JUNE 03,2025
The Philippine national government’s outstanding debt rose to ₱16.75 trillion as of end-April 2025. This marked a 0.41% increase from the previous month, despite the Philippine peso gaining strength against the US dollar.
Domestic Borrowing Fuels Debt Growth
According to the Bureau of the Treasury (BTr), the rise was driven by a 1.85% increase in domestic debt, which totaled ₱11.59 trillion. This uptick resulted from the issuance of ₱300 billion in government bonds, following strong investor demand.
Moreover, the Treasury noted that market access remains strong due to the country’s stable economic fundamentals. Investors continue to offer competitive rates, making local borrowing attractive.
Foreign Debt Declines as Peso Gains Ground
In contrast, the country’s external debt dropped by 2.68%, settling at ₱5.16 trillion. This decrease came from the peso’s appreciation, which led to ₱124.74 billion in savings for the government.
As a result, the share of domestic debt rose to 69.2% of the total portfolio. Meanwhile, foreign debt fell to 30.8%, in line with the government’s goal to reduce exposure to global risks.
PH Debt-Credit Outlook Remains Stable
Despite the debt increase, the country’s credit standing remains steady. In April, Fitch Ratings reaffirmed the Philippines’ “BBB” investment-grade rating with a stable outlook.
Notably, 91.7% of the debt is at fixed interest rates and long-term maturities. This structure helps protect the government from unexpected market changes or interest rate hikes.
PH Debt-Global Risks May Impact Future Borrowing Costs
However, risks persist. Michael Ricafort, Chief Economist at Rizal Commercial Banking Corp., warned that global interest rates may stay high. This is due to former US President Donald Trump’s proposed tariffs and tax plan.
The 10-year US Treasury yield, a global borrowing benchmark, stood at 4.43%, near a three-month high. Ricafort explained that Trump’s plan could widen the US deficit and push borrowing costs higher.
Additionally, proposed 145% tariffs on Chinese goods and higher duties on steel and aluminum may stoke global inflation. In turn, this could force the US Federal Reserve to keep rates high—pressuring central banks like the Bangko Sentral ng Pilipinas to do the same.
Furthermore, if tariffs target the European Union, it could trigger economic strain, raising inflation and unemployment risks. This would likely make the Fed more cautious in its next moves. NOWTREND
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