Amro: PH debt burden to ease in 2026
The Philippines’ debt burden is expected to ease modestly this year, but its fiscal position remains constrained by one of the weakest revenue performances in the region, the Asean+3 Macroeconomic Research Office (Amro) said.
In its latest fiscal policy report, Amro said it projects the country’s debt-to-GDP (gross domestic product) ratio to decline to 62.8 percent in 2026, from 63.2 percent in 2025.
However, the level remains above the widely watched 60-percent threshold. As of end-February, the country’s outstanding debt had already reached a new high of P18.16 trillion.
“Fiscal positions in ASEAN+3 economies have yet to fully normalize as the pace of fiscal consolidation has moderated. Compared with the FY2015—2019 averages, FY2025 fiscal balances improved only in Japan, Lao PDR, Singapore, and Vietnam,” Amro said.
“Moreover, even economies with broadly stable medium-term debt trajectories could face slower debt stabilization—or renewed upward pressure—if downside risks materialize, such as an unexpected economic slowdown or higher-than-planned fiscal spending,” it added.
Asked if the ratio is achievable, economists said the projected decline will largely depend on growth prospects, especially after the economy grew by just 4.4 percent last year.
“On the supportive side, strong GDP growth, improving revenues, and a gradual narrowing of the deficit can help bring the ratio down. Nominal growth, in particular, plays a key role in reducing the debt burden relative to the size of the economy,” John Paolo Rivera, senior research fellow at the Philippine Institute of Development Studies, said.
“On the downside, risks come from slower growth, higher borrowing needs, and external shocks such as elevated oil prices or global volatility, which could widen the deficit or increase financing costs,” he added.
Alongside the easing debt-to-GDP, gross financing needs are also projected to decline to 8.8 percent of GDP in 2026, from 10.1 percent in 2025.
However, Amro warned that higher principal repayments on maturing debt and a sustained interest burden could continue to pose risks.
Jonathan Ravelas, senior adviser at Reyes Tacandong & Co., flagged the risk of fiscal slippage.
“The risk is fiscal slippage—especially if spending overruns persist or growth softens. Higher-for-longer interest rates also raise the cost of carrying debt. The trajectory is encouraging, but markets will judge whether this reflects real fiscal discipline or just favorable growth math,” he said.
More broadly, while the Philippines’ fiscal position is seen to gradually improve across key indicators—including expenditure, fiscal balance, debt, and financing needs—revenue performance remains a weak spot.
Revenue is projected at 15.9 percent of GDP in 2026, unchanged from 2025, making it the fourth lowest among ASEAN+3 economies.
Amro earlier flagged the country’s revenue performance last year as weak, citing delays in the implementation of key tax reform measures.
“Structurally weak revenue performance partly reflects low tax productivity in addition to underlying tax system choices—including statutory rates and the selection of tax instruments,” Amro said.
“Durable revenue mobilization requires structural reforms to major taxes, supported by alignment with evolving global standards,” it added.
Looking ahead, Amro said ASEAN+3 economies face mounting pressure from persistent global uncertainties, including the war in the Middle East and tariff developments, which could trigger renewed economic fallout.
“Should downside risks materialize, fiscal policy should remain agile and flexible to mitigate adverse impacts and support economic stability— in close coordination with monetary policy […] With fiscal positions remaining weak in many economies, continued efforts to enhance fiscal sustainability and rebuild fiscal buffers are warranted,” Amro said.
