Debt burden share to reach P980 billion in 2026 budget

Due to pandemic loans

MANILA, Philippines — The government’s debt burden share will increase to P980 billion under the proposed record P6.793-trillion budget for next year as pandemic-era loans mature.

Based on the 2026 National Expenditure Program (NEP) obtained by The STAR, 14.4 percent of the budget or equivalent to P978.7 billion will be allocated to settle the country’s debts for 2026.

The amount is higher than the 13.9 percent share or about P876.73 billion allocation for this year.

Next year’s debt burden includes P950 billion for interest payments, 12 percent higher than the P848.03 billion under the 2025 General Appropriations Act.

The remaining P28.7 billion is for net lending, same as this year’s level.

Budget Secretary Amenah Pangandaman said the increased debt burden is largely due to the country’s loans and obligations incurred at the height of the pandemic.

Interest payments go to complying with the country’s interest obligations while net lending, a positive balance, refers to the amount the government allocates to finance other units or sectors. These two are the proper measures of the debt burden component of the budget.

The Department of Budget and Management (DBM) has yet to release the complete Budget of Expenditures and Sources of Financing (BESF) for 2026.

The BESF, which will be out only upon submission of the NEP to Congress, contains the detailed expenditure and financing program of the government for next year.

It is in the BESF that the debt service is found, which includes the interest payments and the bigger principal amortization.

The economic team, however, earlier explained that the principal amortization of debt is not included as an expense item under any accounting standard, whether in the private or public sector.

This developed as the settlement of debt obligations incurred from expenses were already recorded in the past.

The principal amortization also does not contribute to additional debt because debt obligation is only transferred from an old creditor to a new creditor in the process of refinancing.

Currently, the country’s outstanding debt has been pushed to a record P16.92 trillion as of end-May largely due to the issuance of new domestic securities.