Philippine National Government Debt Service Bill Surges to P1.23 Trillion in First Half of 2026

The Philippine National Government's (NG) debt service bill surged to approximately P1.227 trillion (around $22.1 billion) in the first half of 2026, marking a substantial 59.7% increase from P768.11 billion (approximately $13.7 billion) during the same period last year, according to data released by the Bureau of the Treasury.

This increase has been attributed primarily to a significant rise in principal repayments, which more than doubled to P743 billion (about $13.3 billion) from P353.29 billion (approximately $6.3 billion) a year earlier. Notably, the largest amortization payments occurred in February and April, with principal repayments reaching P381.71 billion (around $6.8 billion) and P251.36 billion (approximately $4.5 billion), respectively.

Interest payments, while also increasing, did so at a slower rate, rising 16.6% to P483.69 billion (around $8.6 billion) from P414.82 billion (approximately $7.4 billion). Of this amount, P360.72 billion (approximately $6.4 billion) was allocated for domestic debt, while P122.97 billion (around $2.2 billion) was for external obligations.

In June alone, the government's debt service bill amounted to P77.22 billion (approximately $1.4 billion), a decrease of 20.5% from P97.18 billion (around $1.7 billion) in May, yet an increase of 18.5% from P65.14 billion (approximately $1.2 billion) in June 2025. This month saw interest payments drop to P62.43 billion (around $1.1 billion), down 26.2% from P84.60 billion (approximately $1.5 billion) in May, although still 8.7% higher than the previous year's figure.

“The higher US dollar/peso exchange rate in recent years has bloated the peso equivalent of foreign debt, as well as interest payments for those foreign debts.”Michael L. Ricafort, Chief Economist, Rizal Commercial Banking Corp.

The rise in the debt service bill is indicative of the government's ongoing fiscal challenges, with the budget deficit widening by 9.39% year on year to P264.3 billion (approximately $4.7 billion) in June, bringing the six-month gap 2.79% higher. Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort noted that the higher debt service reflects maturing debt and the expanding budget deficit, exacerbated by a higher US dollar/peso exchange rate, which inflates the peso equivalent of foreign debt and interest payments.

As of the end of June, the national government's outstanding debt reached a record high of P19.07 trillion (approximately $340 billion), representing a 2.8% increase from P18.55 trillion (around $335 billion) at the end of May. This debt stock is composed of 67.33% domestic obligations, amounting to P12.84 trillion (approximately $230 billion), and 32.67% external debt, which stands at P6.23 trillion (around $110 billion).

Looking ahead, Ricafort indicated that the debt servicing bill will continue to be influenced by maturing debt, including P100 billion (approximately $1.8 billion) in Treasury bonds and retail Treasury bonds due in September. He cautioned that potential rate hikes and a persistently high US dollar/peso exchange rate may further escalate both principal and interest payments.