As millions of barefoot devotees fill the streets of Manila today for the Traslacion, straining under the Black Nazarene’s cross, another burden is being carried far from the procession route—one borne not on shoulders, but on balance sheets.
The Philippines’ national government debt has swelled to a record P17.647 trillion as of the end of November, a burden that affects every Filipino—shaping prices, taxes, and even the opportunities available to them.
The timing has sharpened the unease. The debt surge comes amid renewed scrutiny over public spending following revelations linked to the Floodgate scandal, which has raised questions about waste and accountability in flood control projects.
Estimates suggest that as of last year, around $1.3 billion, or about P79 billion, may have been lost to projects that were either non-existent or left largely unfinished, with alleged leakages ranging from 25 percent to 70 percent of project costs.
Against that backdrop, the scale of the borrowing has drawn attention.
P9-T more borrowings loom
A senator warned President Ferdinand Marcos Jr. could add roughly P9 trillion in debt during his term, on top of the P12.8 trillion inherited from previous administrations.
The buildup did not happen overnight. From 2022 to early 2025, national government debt climbed from roughly P12.79 trillion to P16.75 trillion, growing at an average of over 9 percent per year.
During the same period, economic growth averaged just 5 to 6 percent, meaning debt obligations grew faster than the economy that was supposed to support them.
The strain becomes clearer in the budget. In 2023, the government spent about P1.6 trillion to service the debt. By 2024, that figure jumped to roughly P2 trillion, driven mainly by higher principal repayments.
In 2025, debt service remained near P2 trillion, with interest payments alone approaching P700 billion a year.
By 2024 and 2025, nearly half of government revenue, about 48 to 51 percent, was being used to pay interest and principal. Interest payments alone now absorb roughly one out of every six pesos collected by the state.
Debt before services
For households, the cost is indirect but persistent. Debt service is paid before classrooms are built, hospitals are upgraded, or social protection is expanded. As borrowing grows, the fiscal space narrows.
Despite the borrowing clip and the intensified tax collections, these will not be enough to plug the deficit and would “inevitably require new fiscal or tax reform measures to curb additional borrowings,” according to Rizal Commercial Banking Corp. chief economist Michael Ricafort.
Inflation, on the surface, appears manageable. Headline inflation averaged 1.7 percent in 2025, rising slightly to 1.8 percent in December, driven largely by food items such as vegetables and fish. Core inflation remains subdued, allowing monetary easing.
But low inflation did not mean universal relief. Households without income increases still lost purchasing power — about 1.7 percent in real terms. Rising food prices, especially for vegetables and fish, hit low-income families the hardest, as they spend a bigger portion of their budgets on food.
A market check showed four pieces of siling labuyo (local chili) retailing at P10 or P2.50 per piece on Thursday. A single doughnut from a popular baker now costs between P15 and P52 — a steep jump in price.
As borrowing expands, interest payments take priority. Government funds go first to creditors, leaving less for subsidies, agricultural support, or transportation aid that could help ease price shocks. Even when inflation is low, the rising debt limits the government’s ability to respond.
Central bank data add nuance. External debt service fell by more than 21 percent in the first nine months of 2025, easing short-term pressure. But total external debt climbed to a record $149.09 billion, underscoring a familiar pattern: lower servicing costs today do not erase higher obligations tomorrow.
By the third quarter of 2025, government debt hit 63.1 percent of GDP, surpassing the 60-percent benchmark. Economists note this does not signal collapse, but it sharply limits choices.
Behind the numbers lies a deeper concern: intergenerational debt, economists have warned.
Borrowing today claims future income. When government funds drive infrastructure and growth, the burden comes with shared benefits. When money leaks through waste or corruption, future Filipinos will inherit the bill with little to show for it.
In this light, inflation in 2025 was not the villain. It was the signal. Low inflation has hidden a government increasingly constrained by debt, with fewer tools to protect households from price shocks.