The Marcos administration is seeking to implement the largest national budget in Philippine history, a whopping P6.793 trillion for 2026, despite a tight fiscal space, growing deficit and ballooning debt, raising questions on how the government plans to balance ambition with sustainability.

Approved by the Development Budget Coordination Committee (DBCC) in its 191st meeting on 27 June, the proposed 2026 National Expenditure Program (NEP) is 7.4 percent higher than this year’s P6.326-trillion budget and represents 22 percent of the country’s projected GDP.

Budget Secretary Amenah Pangandaman, who chairs the DBCC, said the new proposal “reflects the government’s commitment to fostering inclusive economic growth while maintaining fiscal discipline.”

The NEP is scheduled to be submitted to Congress in August. But even before deliberations begin, the numbers show the balancing act facing the administration.

The DBM received budget proposals amounting to P10.1 trillion from national agencies, but only P6.793 trillion was cleared for 2026 funding. According to Pangandaman, this prioritization considered program readiness and absorptive capacity, as well as ongoing efforts to reduce the budget deficit.

“We focused on prioritizing programs and projects that deliver measurable impact… aligned with our national goals,” she said.

The proposed budget places emphasis on education, health, upskilling, digitalization and climate resilience, and maintains support for infrastructure under the Build Better More program. It also channels funding into devolved local services, a strategy intended to strengthen governance at the grassroots.

Despite these ambitions, the budget push comes as the government faces increasing pressure to contain its widening fiscal gap.

Rising debt, rising spending

As of end-April 2025, the national government’s outstanding debt hit P16.75 trillion, according to the Bureau of the Treasury (BTr) on 3 June. While the month-on-month rise was limited to 0.41 percent — thanks to a stronger peso — domestic debt still climbed to P11.59 trillion, and external obligations stood at P5.16 trillion.

The debt load is expected to remain manageable, with 91.7 percent of obligations on fixed interest rates and 82 percent long-term. The administration also maintains that it is on track to bring the debt-to-GDP ratio below 60 percent by the end of President Ferdinand Marcos Jr.’s term.