The national government’s outstanding debt as of July rose by 1.3 percent to P15.69 trillion from the June level, the Bureau of the Treasury (BTr) reported on Tuesday.

Borrowings from domestic sources reached P10.75 trillion, up by 1.7 percent or P180 billion, after the government issued securities amounting to P180.52 billion.

However, the BTr said payments for US dollar-denominated securities for the domestic market were cheaper by P490 million due to the peso appreciation against the foreign currency.

Compared to the level in December 2023, domestic debt rose by 7.3 percent or P735.22 billion.

Domestic loans continued to make up the bulk, or 68.54 percent, of the total debt.

Meanwhile, borrowings from abroad grew slower by 0.5 percent to P4.94 trillion. The growth was driven by loans for government projects amounting to P5.25 billion.

Due to the currency appreciation, the BTr said the government registered a higher loan amount at P35.44 billion. However, the Treasury said this was partially offset by the peso appreciation against the US dollar, which reduced external debt by P14.23 billion.

‘What is important is that the debt-to-GDP trajectory will eventually go down.’

From January to July, external debt rose by 7.4 percent, or P338.5 billion, compared to the level in December last year.

Finance Secretary Ralph Recto said the government aims to reduce the debt-to-GDP (gross domestic product) ratio from 60.6 percent this year to 56 percent in 2028 with a “realistic” perspective.

Given the Marcos administration’s goal to elevate the country to upper middle-income status, Recto said the government is continuing to borrow for infrastructure projects, local labor force skills development and supply chain improvements to boost exports.

“What is important is that the debt-to-GDP trajectory will eventually go down,” he said.

Rizal Commercial Banking Corp. chief economist Michael Ricafort said the government will likely keep its debts manageable as the peso remains strong against the US dollar due to a robust Philippine economy.

“The peso exchange rate is still among the strongest against the US dollar since early April,” he said.

“This is after the country experienced strong GDP growth and employment, and continued demand for bank loans,” Ricafort added.

The government aims to achieve a GDP growth of 6 to 7 percent this year and 6.5 to 8 percent in 2028.