The national government’s outstanding debt climbed to a record P18.55 trillion as of end-May, driven largely by increased domestic borrowings to finance government requirements amid geopolitical uncertainties in the Middle East, the Bureau of the Treasury (BTr) reported on Thursday.

Data released by the BTr showed that the debt stock rose by P76.11 billion, or 0.41 percent, from P18.47 trillion recorded at end-April. The increase was primarily attributed to the net issuance of domestic securities as the government continued to raise funds for its financing needs.

Increase in debt burden tempered

Despite the rise in borrowings, the Treasury said the appreciation of the peso against the US dollar and other foreign currencies helped temper the increase in the country’s debt burden.

Domestic obligations accounted for the bulk of the debt stock at 67.37 percent, while external debt comprised 32.63 percent, reflecting the government’s strategy of relying more heavily on local financing to support domestic capital markets and reduce exposure to foreign exchange risks.

Domestic debt rose by P80.12 billion, or 0.65 percent, to P12.50 trillion, mainly due to the net issuance of government securities amounting to P80.23 billion.

Meanwhile, external debt declined slightly by P4.01 billion, or 0.07 percent, to P6.05 trillion as favorable foreign exchange movements offset fresh external borrowings.

Downward valuation

The Treasury said the peso’s appreciation generated a downward valuation effect of P18.91 billion, which outweighed net external debt availments of P14.90 billion.

On a year-on-year basis, total outstanding debt increased by P1.63 trillion, or 9.62 percent, from P16.92 trillion in May 2025. Since the start of the year, the debt stock has expanded by P838.9 billion, equivalent to a 4.74-percent increase.

The BTr also reported that national government guaranteed obligations surged to P443.50 billion as of end-May, up by P60.28 billion from the previous month, largely due to the issuance of new domestic guarantees.

The Treasury maintained that the government’s debt portfolio remains aligned with its prudent debt management strategy, with a continued preference for domestic funding sources while managing foreign exchange exposure.