Public debate often fixates on the size of the national debt, which is a concern in itself. But the more consequential number—the one that ultimately determines what government can actually do—rarely makes headlines: how much of the national budget is now being consumed simply to service that debt.
Debt has grown faster than the economy
From 2022 to 2025, national government debt rose from ₱12.79 trillion to about ₱16.75 trillion, growing at an average pace of over 9 percent a year. Over the same period, the economy expanded by only about 5 to 6 percent annually. In plain terms, debt has been growing faster than the country’s capacity to carry it.
Yet the true strain does not show up in the debt stock alone. It shows up in the budget.
In 2023, the government paid about ₱610 billion in interest and ₱940 billion in principal amortization, for total debt service of roughly ₱1.6 trillion.In 2024, debt service jumped sharply to about ₱2.0 trillion, driven mainly by a surge in principal repayments, while interest payments rose to roughly ₱670 billion. In 2025, debt service remains at around ₱2.0 trillion, with interest payments now approaching ₱700 billion annually.
By 2024–2025, nearly half of all government revenues—about 48 to 51 percent—were being used to pay interest and principal on past borrowing. Interest payments alone now absorb roughly one out of every six pesos collected by the government. These are funds that can no longer go to classrooms, health facilities, climate resilience, or disaster preparedness.
This is what fiscal stress looks like in real life—not a dramatic collapse, but a quiet narrowing of choices.
Why this is not yet a crisis—and why that is no comfort
To be clear, the Philippines is not on the brink of a debt meltdown. More than 80 percent of the debt is long-term, while short-term obligations account for only about 5 percent of the total.
This matters because of rollover risk—the danger that large amounts of debt fall due all at once and must be refinanced under volatile market conditions or at sharply higher interest rates. With only a small share of short-term debt, the Philippines faces low rollover risk and no immediate refinancing cliff.
But this stability comes at a price.
Long-term debt locks in payments for decades. It protects against refinancing shocks, but it also builds rigidity into future budgets. When revenues underperform or emergencies strike, debt service comes first—by law and by necessity. Everything else must compete for what remains.
This is why debt service—not the debt-to-GDP ratio—has become the binding constraint on fiscal policy.
Debt service displaces all priorities
Even under optimistic assumptions—steady growth, easing interest rates, and gradual revenue improvement—debt service is projected to remain above 40 percent of government revenues until at least 2028. There is no automatic relief in sight. Growth alone will not resolve the problem.
The consequences are cumulative and corrosive. When half of government revenues are effectively pre-committed, public finance becomes a zero-sum exercise. Any increase in education or health spending requires either new borrowing or cuts elsewhere. Crisis response becomes harder. Long-term planning gives way to short-term patchwork.
This predicament is the result of years of heavy borrowing combined with a persistently weak revenue effort. It is not inevitable—and it is not irreversible—but it does demand honesty.
Budget plunder now, debt service tomorrow and fiscal suffocation next
The ongoing controversy over the systematic plunder and distortion of the national budget over the past three years adds a dangerous dimension to this debt service conundrum.
When public funds are diverted, misallocated or stolen, the damage does not end with wasted pesos. Borrowing rises to cover inefficiency and leakage, while revenues fail to translate into real public value. Debt accumulates, but productive capacity does not. The country is then left paying interest and principal
for expenditures that never strengthened growth, services, or resilience.
This risk is magnified by the growing reliance on unprogrammed appropriations, lump-sum insertions, and post-enactment budget reallocations that weaken transparency and blur accountability. When the budget process itself is bent to accommodate politically driven spending, borrowing fills the gap—and the public is left servicing debt incurred not for development, but for distortion.*
In effect, budget plunder today becomes debt service tomorrow—and fiscal suffocation the day after.
Fiscal discipline and accountability—Now!
Debt sustainability going forward will depend less on optimistic growth forecasts and more on credible revenue reforms, disciplined spending priorities, and respect for the integrity of the budget process. Without these, future budgets may look larger in peso terms but will be smaller in purpose—because so much of them is already spoken for.
The numbers tell a simple story.
The debt is no longer just growing. It is quietly eating the budget—and with it, our room to choose our future.
And that is precisely why the Supreme Court’s pending rulings on the legality of recent budget practices matter—not only for constitutional order, but for the country’s long-term fiscal survival.
*As reflected in the structure and execution of the 2023, 2024, and 2025 General Appropriations Act.
Florencio “Butch” Abad was Vice-Chair/Chair of the House Committee on Appropriations (1995–2004) and Secretary of Budget and Management (2010–2016).
Note: thumbnail national debt illustration was done using Google Gemini.
