Filipinos Are Paying Off Debt While the Government Borrows Like Crazy — IIF Data Shows a Growing Disconnect
There's a growing disconnect in the Philippine economy: regular Filipinos and businesses are tightening their belts and paying down debt, while the government is borrowing at record levels. According to the latest Global Debt Monitor from the Washington-based Institute of International Finance (IIF), the Philippines' government debt-to-GDP ratio climbed to 58.8% at the end of 2025 — up from 57.8% a quarter earlier and 56.6% a year ago.
Meanwhile, Filipino households are doing the opposite. Household debt eased to 11% of GDP, down from 11.6% a year ago. Non-financial corporates dropped to 25.7% (from 27.7%), and the financial sector fell to 7.5% (from 7.9%). SM Investments group economist Robert Dan Roces summed it up as 'private caution, public carry' — families and companies are deleveraging while the government carries the borrowing burden.
Why the private-sector caution despite BSP cutting interest rates by a cumulative 225 basis points since August 2024, bringing the policy rate down to 4.25%? Roces explained that households and corporates are 'still in repair mode after the prior tightening cycle' — they're prioritizing paying off old debts over taking on new ones, kahit bumaba na ang interest rates.
On the government side, the Bureau of the Treasury plans to borrow a record ₱2.68 trillion this year to fund infrastructure and social spending. This comes as full-year 2025 economic growth fell to a post-pandemic low of just 4.4%, partly due to the fallout from the flood-control infrastructure corruption scandal that dampened both public and private investment.
Under the Philippine Development Plan 2023-2028, the Marcos administration aims to bring government debt down to 54.7% of GDP by 2028. But with the ratio still climbing and borrowing at all-time highs, that target looks increasingly ambitious. The big question: can the government spend its way to faster growth, or will ballooning debt become a problem of its own? Para sa ordinary Filipinos paying off their credit cards, at least their side of the ledger is getting healthier.
Source: Manila Bulletin
