THE NATIONAL GOVERNMENT’S (NG) outstanding debt is projected to hit a record P17.35 trillion at the end of 2025, the Department of Budget and Management (DBM) said.
The 2025 Budget of Expenditures and Sources of Financing showed the NG’s debt stock is expected to increase by 8.08% from the projected P16.06-trillion debt at the end of 2024.
The bulk will come from outstanding domestic debt, which is expected to rise by 9.64% to P11.98 trillion by end-2025 from P10.92 trillion by yearend.
Outstanding external debt is also seen to jump by 4.76% to P5.38 trillion by end-2025 from P5.13 trillion by end-2024.
Budget Undersecretary Joselito R. Basilio said the debt reflects the massive borrowings incurred by the government during the coronavirus pandemic, which means debt will likely peak in the next few years.
However, he said the government has a fiscal consolidation plan and could repay the debt as the economy continues to grow.
For 2025, the NG set its borrowing program at P2.55 trillion, 0.97% lower than P2.57 trillion this year.
National Treasurer Sharon P. Almanza said next year’s gross borrowings are lower as it expects fewer refinancing requirements.
“The decline is on the refinancing requirement. Refinancing requirements for both external and domestic are lower,” she told BusinessWorld in a Viber message.
Broken down, 80% of the borrowings will come from domestic sources while the remaining 20% will come from foreign sources.
Gross domestic borrowings were set at P2.04 trillion for 2025, 5.91% higher than the P1.92-trillion program in 2024.
On the other hand, next year’s gross external borrowings were set at P507.41 billion, 21.46% lower than P646.08 billion this year.
“[Some] program loans, for example, and other project loans, will decrease by 2025 because many of our 2024 projects or programs already received a loan,” Mr. Basilio said.
Gross domestic borrowings will include P1.98 trillion in fixed-rate Treasury bonds and P60 billion in Treasury bills.
On the other hand, gross foreign debt will include P236.11 billion in program loans, P73.55 billion in project loans and P197.75 billion in bonds and other inflows.
The NG borrows from foreign and domestic lenders to fund its budget deficit as it spends more than its revenues.
“The outstanding NG debt level in pesos could continue to post new record highs amid continued budget deficits that would be financed by additional NG borrowings,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
He noted that an offsetting factor could be the country’s gross domestic product (GDP) growth.
The government is targeting 6.5-7.5% GDP growth next year.
“Relatively faster GDP growth would help reduce the NG debt-to-GDP ratio to below the international threshold of 60% to help maintain the country’s favorable credit ratings,” he added.
The NG’s debt as a share of GDP stood at 60.2% at the end of the first quarter. The government is targeting a 60.3% debt-to-GDP ratio by yearend, slightly above the 60% threshold deemed manageable for developing economies.
Mr. Ricafort said the government should intensify tax collections, impose new or higher taxes and ensure efficient spending to narrow the budget deficit and further bring down the debt-to-GDP ratio.
Meanwhile, the government set its debt servicing program at P2.05 trillion next year, 1.19% higher P2.03 trillion this year.
Payments for domestic debt are programmed at P1.61 trillion, while foreign debt payments are at P436.78 billion.
TAX REVENUESFor 2025, the NG aims to collect P4.64 trillion in revenues, 8.77% higher than the P4.27-trillion projected collection this year.
The government expects to collect P4.33 trillion in tax revenues in 2025, 13.41% lower than its P3.82-trillion projection this year.
The Bureau of Internal Revenue is expected to collect P3.23 trillion, while the Bureau of Customs is seen to generate P1.06 trillion.
On the other hand, nontax revenues are expected to fall by 48.27% to P210.79 billion next year from P407.49 billion this year.
The target collection from privatization more than doubled to P101.02 billion in 2025 from P42.12 billion this year.
Next year’s budget also has a P13-billion contingent fund, which includes safeguards to prevent its abuse, Ms. Pangandaman said.
“The fund can only be used for specific urgent needs such as government legal obligations with final decisions from authorities, needs of newly created agencies, and the fund cannot be used for confidential and intel funds for nonsecurity agencies unless the President certifies in necessity, and buying or improving of vehicles.” — B.M.D.Cruz