In late October, a Tokyo rating agency looked at the Philippines and found a patient but unwelcome truth: a nation's debt, measured against the work its people produce, is unlikely to lighten soon. Growth has slowed to a post-pandemic low, consumers are pulling back as fuel costs seep into daily life, and public works are being squeezed, so the debt-to-output ratio is expected to hover in the mid-60 percent range. It is a reminder that fiscal health is less a single decision than a slow tide, moved by both the state's ledgers and the everyday choices of households, and that hope now rests on a
Japan's JCR Sees Philippine Debt-to-GDP Stuck in Mid-60% Range as Growth Slows
Filipinos have been buying and consuming less
Mark
Why does a mid-60-percent debt ratio matter so much?
Mimi
Because it's already at a 21-year high. At end-June it was 66 percent, the highest in 21 years, and JCR says it will barely move from the mid-60s.
Mark
And the peso figures?
Mimi
Debt hit ₱19.07 trillion by midyear, above the ₱19.06-trillion ceiling targeted for the full year, then ₱19.61 trillion by end-August, a record.
Luke
Worth noting 2004 peaked at 71.6 percent, so this isn't the worst ratio on record. It matches a level from the Arroyo years, not an all-time high.
Mark
What's driving the slowdown?
Mimi
Growth was 2.3 percent in the second quarter, a post-pandemic low. JCR cites squeezed infrastructure spending and weaker consumption as oil costs pass through.
Luke
That's JCR's reading. The report attributes it to those factors, but I'd want to see how much each one contributes. That isn't broken out here.
Mark
Is the recovery credible?
Mimi
JCR expects growth to pick up and held its A- rating with a stable outlook in August, anticipating second-half recovery.
Luke
But that's a projection. The first-half average was 2.6 percent against a 3.5 percent full-year target, and nothing here confirms the second half is turning. The deficit path to 3.5 percent by 2030 is likewise a government forecast.
Le Pouls
- Growth slid to 2.3 percent in the second quarter, the weakest since the pandemic, and the first half trails government targets.
- Debt has climbed to a record ₱19.61 trillion, with fresh borrowing and a weaker peso pushing both domestic and foreign obligations higher.
- Households are spending less as elevated crude prices ripple into the domestic market, tightening the economy from the inside.
- Authorities are betting on a second-half rebound and a deficit that narrows from 5.4 percent of GDP toward 3.5 percent by 2030.
- The outlook is landing on a plateau: the debt ratio is projected to drift down only gradually, and the outcome hinges on whether recovery arrives on time.
In late October, a Tokyo rating agency looked at the Philippines and found a patient but unwelcome truth: a nation's debt, measured against the work its people produce, is unlikely to lighten soon. Growth has slowed to a post-pandemic low, consumers are pulling back as fuel costs seep into daily life, and public works are being squeezed, so the debt-to-output ratio is expected to hover in the mid-60 percent range. It is a reminder that fiscal health is less a single decision than a slow tide, moved by both the state's ledgers and the everyday choices of households, and that hope now rests on a recovery still waiting to be seen.
On October 22, Japan Credit Rating Agency published a report on the Philippines with a sober conclusion: the country's debt, relative to the size of its economy, will not ease quickly. The agency expects the debt-to-GDP ratio to remain in the mid-60 percent range, because growth is losing momentum and the government's fiscal repair is moving slowly.
The pressure is visible in the numbers. The economy grew 2.3 percent in the second quarter of 2026, its weakest pace since the pandemic, and first-half growth averaged 2.6 percent. JCR pointed to a squeeze on public infrastructure spending and a drop in private consumption, as Filipinos cut back while high oil prices worked their way into everyday costs.
The starting point is already heavy. National government debt reached 66 percent of GDP at the end of June, the highest in 21 years, and by the end of August total debt had climbed to a record ₱19.61 trillion as new borrowing and a weaker peso added to the load.
Official projections promise only a slow descent: the debt ratio is set to fall to 63.1 percent by 2030, and the budget deficit to narrow from 5.4 percent of GDP this year to 3.5 percent. The government targets growth of at least 3.5 percent this year and 5 to 6 percent a year from 2027, and JCR still expects a recovery as investment and industrial upgrading take hold. The rating agency's earlier stance, an "A-" rating held with a stable outlook, rests on the same hope.
What comes next is the test: whether the second-half rebound truly appears in the data, and whether the deficit keeps shrinking on schedule. The modest decline in debt depends on both.
On Oct. 22, Tokyo-based Japan Credit Rating Agency Ltd. (JCR) published an issuer report on the Philippines with a plain message: the country's debt burden relative to the size of its economy is not likely to ease soon. JCR expects the ratio of sovereign debt to gross domestic product to stay in the mid-60-percent range, because growth is moderating and improvement in the government's finances is expected to come slowly.
The growth numbers behind that view are weak. The economy expanded 2.3 percent in the second quarter of 2026, a post-pandemic low, which brought average growth for the first half of the year to 2.6 percent. JCR pointed to two drags: a fiscal squeeze on public infrastructure projects, and a decline in private consumption. Filipinos have been buying and consuming less, the agency observed, as elevated crude oil prices have quickly worked their way into the domestic market. Together with a growing debt pile, JCR said, this makes the road to fiscal consolidation harder. In its words, the pace of fiscal improvement is expected to slow, leaving the ratio in the mid-60s.
The starting point is already high. At the end of June, the national government's debt stood at 66 percent of GDP, the highest level in 21 years. That matches a level last seen under President Gloria Macapagal-Arroyo in 2004, when the ratio peaked at 71.6 percent. In peso terms, total debt reached ₱19.07 trillion by midyear, which exceeded the ₱19.06-trillion debt ceiling targeted for the full year.
It has kept climbing. By the end of August, outstanding debt hit a new record of ₱19.61 trillion, as fresh borrowing and a weaker peso lifted both domestic and external obligations.
The Bureau of the Treasury's updated projections show only a gradual decline in the ratio: 64.7 percent by 2028, 64.4 percent by 2029, and 63.1 percent by 2030. The budget deficit is projected to narrow along a similar path, from 5.4 percent of GDP in 2026 to 5.1 percent in 2027, 4.8 percent in 2028, 4.2 percent in 2029, and 3.5 percent in 2030. JCR described the Marcos Jr. administration as pursuing gradual fiscal consolidation under its medium-term fiscal framework, and said fiscal soundness is expected to be maintained to a certain extent.
The agency still expects growth to recover over the medium term as the government works to improve the investment environment and promote industrial upgrading. The government is targeting growth of at least 3.5 percent this year, then 5 to 6 percent annually from 2027 through 2030. On external accounts, JCR noted that although the current account deficit persists, net inflows of direct investment partially offset it.
The report fits with JCR's earlier stance. Last August it kept the Philippines' credit rating at "A-" with a stable outlook, projecting a return to high growth, with early signs of recovery in the second half of 2026 and real GDP rebounding from July to December.
What to watch is whether that second-half recovery actually shows up in the data, and whether the deficit keeps shrinking toward 3.5 percent of GDP by 2030, since the debt ratio's modest decline depends on both.
Citations marquantes
The pace of fiscal improvement is expected to slow, and the government debt-to-GDP ratio is projected to remain in the mid-60-percent range.— Japan Credit Rating Agency, Oct. 22 issuer report
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