Marcos on track for biggest debt buildup

President Ferdinand Marcos Jr. is on track to leave behind the biggest national debt buildup of any post-EDSA president when he steps down in 2028, having already added P6.6 trillion to the government’s debt in just over four years.

And if the numbers are any indication, the meter is still running.

The national government’s outstanding debt hit a record P19.39 trillion at end-July 2026, up P323.53 billion, or 1.7 percent, from P19.07 trillion a month earlier, according to the Bureau of the Treasury.

The July figure was 10.39 percent higher than the P17.56 trillion recorded a year earlier and 9.50 percent above the P17.71 trillion at the end of 2025.

More strikingly, Marcos — who has been in office for four years and two months — has already accumulated about 96 percent of the P6.85 trillion Rodrigo Duterte added to the national debt during his entire six-year presidency.

Duterte inherited P5.94 trillion in national government debt in June 2016 and left office with the debt at P12.79 trillion in June 2022.

Marcos inherited that P12.79 trillion. By July 2026, it had reached P19.39 trillion. The difference: P6.60 trillion.

In comparison, during the six-year presidency of Benigno Aquino III, the national debt rose by only P1.36 trillion — from P4.58 trillion in June 2010 to P5.94 trillion in June 2016.

Marcos therefore has added nearly five times as much debt as Aquino did and is already within P250 billion of Duterte’s six-year increase.

At the current pace, the Marcos administration would overtake Duterte before the end of its term.

According to economist Sonny Africa, executive director of the independent think tank Ibon Foundation, gross borrowing, which did not include principal repayments, totaled P10.3 trillion in the Marcos Jr. administration’s first four years, more than the pandemic-driven P9.4 trillion over six years of the Duterte administration.

The P7.8 trillion in debt service under Marcos Jr. is already more than that of Duterte (P5.2 trillion), Noynoy Aquino (P4.9 trillion), Arroyo (P5.4 trillion), Estrada (P522 billion), Ramos (P737 billion), and Cory Aquino (P546 billion).

The debt ratio at 65.2 percent of GDP in the first quarter of 2026 is on the way to being the highest annual burden in 20 years, since the 65.7 percent in 2006.

“Debt didn’t have to go this high if there weren’t such big tax cuts for rich families and the biggest corporations under reform measures Tax Reform for Acceleration and Inclusion Act (TRAIN), Corporate Recovery and Tax Incentives for Enterprises Act (CREATE) and Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy Act (CREATE MORE),” Africa said.

He said the government should have instead taxed the incomes of the super-rich families and the largest corporations more, imposed a billionaire’s wealth tax, or imposed windfall taxes on oil firms benefiting from oil deregulation and on real estate developers benefiting from public infrastructure projects.

RCBC chief economist Michael Ricafort said the concern should not be simply the amount of borrowing, but whether government resources are being put toward investments that generate lasting economic returns.

“[B]etter to use the limited financial resources of the government with an investment approach that would generate the highest return to the economy and society such as education, infrastructure, and other related social services that would bring the greatest incremental benefits for the poorest of the poor and lift more people from poverty, leading to faster and more inclusive economic growth and development over the long term, instead of outright doleouts/ayudas,” he told DAILY TRIBUNE.

Economic payoff

The uncomfortable question is what the country is getting for all that borrowing.

The economy grew only 2.3 percent year-on-year in the second quarter of 2026, while gross capital formation — broadly, investment in the economy — plunged 9.2 percent. Industry actually contracted 2.4 percent.

Household consumption, the main engine of the Philippine economy, grew only 2.8 percent. Agriculture expanded 2.7 percent, while services grew 4.5 percent.

The picture is therefore not one of an economy roaring ahead on borrowed money.

If anything, one of the most important indicators of future growth is moving in the opposite direction. Gross capital formation fell 1.7 percent in 2025 before plunging another 9.2 percent in the second quarter of this year.

That is a particularly awkward number for an administration that has accumulated P6.60 trillion in additional national government debt.

The peso problem

The peso isn’t helping. It stood at P61.327 to the US dollar at end-July, compared with roughly P54.99 at end-June 2022 when Marcos took office — a depreciation of 11.5 percent.

The weaker currency matters directly to the debt story. The Bureau of the Treasury said the increase in external debt in July was partly caused by the higher peso value of foreign currency-denominated obligations.

External debt reached P6.28 trillion, up 15.12 percent from a year earlier and 12.31 percent from end-2025.

External loans stood at P3.09 trillion, while external debt securities reached P3.19 trillion.

Meanwhile, domestic debt climbed 2.11 percent, or P271.33 billion, in July alone to P13.11 trillion. The increase was driven largely by P271.22 billion in net issuance of government securities.

Domestic debt now accounts for 67.61 percent of the national debt, with external obligations making up the remaining 32.39 percent.

Inflation remained painfully high at 6.2 percent in July, only slightly below June’s 6.4 percent, while the January-to-July average stood at 5 percent.

For the bottom 30 percent of households, however, inflation was even higher at 7.8 percent.

So while the headline economic growth figure has slowed, the cost of living for poorer households has been rising faster.

The external trade picture is hardly comforting.

The country posted a $5.97-billion merchandise trade deficit in July, with exports of US$8.15 billion overwhelmed by $14.12 billion in imports.

The Philippines also recorded a US$1.47-billion balance-of-payments deficit in July, while the first-quarter current-account deficit stood at US$5.664 billion.

The government is also paying increasingly dearly for the debt it has accumulated.

The 2026 national budget provides P950 billion for interest payments alone, up P101.97 billion, or 12.02 percent, from the P848.03 billion allocated in 2025.

That is nearly P1 trillion going to creditors — before a single peso of principal is repaid.

To be fair, the economic ledger isn’t entirely red.

Poverty incidence fell to 9.7 percent in 2025 from 15.5 percent in 2023, while the proportion of poor families declined to 6.4 percent from 10.9 percent.

Average annual family income also rose 16.5 percent, from P353,230 in 2023 to P411,350 in 2025.

While those gains matter and should not be ignored, they also sharpen the question rather than eliminate it: How much is the country paying to produce them?

Since Marcos took office, the national debt has risen P6.60 trillion; the peso has fallen from roughly P55 to above P61 to the dollar; GDP growth has slowed to 2.3 percent; gross capital formation has plunged 9.2 percent; industry has contracted 2.4 percent; July inflation has hit 6.2 percent, rising to 7.8 percent for the poorest 30 percent; the trade deficit has reached $5.97 billion; and the government is budgeting P950 billion just for interest payments.