By Justine Irish D. Tabile, Senior Reporter

THE National Government’s (NG) outstanding debt hit a fresh high of P18.16 trillion as of end-February, reflecting a stable and well-managed debt position, the Bureau of the Treasury (BTr) said on Wednesday.

Latest data from the Treasury showed that the debt inched up by 0.14% from P18.13 trillion at the end of January.

Year on year, outstanding debt went up by 9.19% from P16.63 trillion at end-February 2025.

“The modest uptick underscores the government’s stable and well-managed debt position amid evolving global financial conditions,” the BTr said in a statement.

“This was largely driven by the continued prioritization of domestic financing to protect the government’s debt position from unfavorable external developments,” it added.

NG debt is the total amount owed by the Philippine government to creditors such as international financial institutions, development partner-countries, banks, global bondholders and other investors.

The bulk or 68.7% of the total debt stock came from domestic sources, while the rest were external borrowings.

“With domestic debt accounting for 68.7% of the total, the NG maintains a prudent debt profile that minimizes vulnerability to foreign exchange (forex) fluctuations,” BTr said.

Domestic debt, which was composed of government securities, rose by 1.25% to P12.48 trillion at end-February from P12.32 trillion at end-January, “as the government issued more securities amounting to P158.14 billion to raise funds for national development.”

Year on year, it jumped by 11.19% from P11.22 trillion in the same period.

“The impact of currency movements on foreign currency-denominated domestic securities remained minimal, reducing valuations by P3.75 billion,” it added.

Meanwhile, external debt dropped by 2.21% to P5.68 trillion as of end-February from P5.81 trillion at end-January.

However, external debt jumped by 5.03% from P5.41 trillion in February 2025.

BTr said that the drop is “primarily driven by favorable forex rate movements, which decreased the peso value of US dollar- and third currency-denominated obligations by a combined P136.43 billion.”

“These valuation gains more than offset net external loan availment amounting to P7.78 billion,” it added.

The peso closed at P57.665 against the dollar at end-February, appreciating by P1.195 from its P58.860-per-dollar finish at end-January.

External debt was composed of P2.93 trillion in global bonds and P2.75 trillion in loans.

“Despite the decline in external debt stock, the NG continued to access external financing strategically. As of end-February 2026, total external financing reached P203.10 billion, including the successful issuance of $2.75 billion in triple-tranche global bonds with tenors of 5.5, 10, and 25 years,” it said.

“This reflects sustained investor confidence in the country’s credit profile and the NG’s ability to tap international markets on reasonable terms.

Year-to-date, NG external debt rose by P88.98 billion, or 1.59%, from P5.59 trillion as of end December.

Meanwhile, NG’s guaranteed obligations increased by 10.11% to P379.98 billion as of end-February from P345.08 billion in the previous month.

“The increase was primarily driven by new guarantees extended to the Power Sector Assets and Liabilities Management (PSALM) Corp., which is partially offset by net repayments and favorable currency movements,” it said.

Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said that the increase in outstanding debt does not reflect yet the impact of the war in the Middle East, which started in March.

“But it could still partly reflect some government underspending since the latter part of 2025 due to the anomalous flood-control projects,” he said in a Viber message.

The minimal increase, he said, reflects the stronger peso exchange rate at P57 levels in February “which somewhat tempered the peso equivalent of external debts.”

For the coming months, Mr. Ricafort said the budget deficit is expected to widen amid an increase in government spending which would require more NG borrowings.

“Further, the record high US dollar-peso exchange rate above P60 recently could lead to a higher peso equivalent of foreign debt,” he said.

The Marcos administration projected the outstanding debt level to reach P19.06 trillion in 2026. Of this, around 70% or P13.28 trillion are domestic debt, while P5.78 trillion are external debt.

By Justine Irish D. Tabile, Senior Reporter

PHILIPPINE FACTORY activity in March slumped to a three-month low in March as output and new orders declined amid the war in the Middle East, S&P Global said on Wednesday.

S&P Global Philippines Manufacturing Purchasing Managers’ Index (PMI) slipped to 51.3 in March from 54.6 in February. This was the weakest PMI reading in three months or since the 50.2 recorded in December.

A PMI reading above 50 denotes better operating conditions than in the preceding month, while a reading below 50 shows deterioration.

Despite the sharp slowdown in growth, March marked the fourth straight monthly improvement in the Philippine manufacturing sector.

“The war in Middle East weighed on the performance of the Philippines manufacturing sector, March PMI data showed,” Maryam Baluch, economist at S&P Global Market Intelligence, said in the report.

“With vast majority of the country’s oil supply coming from the Gulf countries now under threat, the President has declared a national energy emergency. Filipino manufacturers are exposed to shocks in oil and fuel prices rippling through global markets, as signaled via notable hikes in costs and charges, and softer demand conditions,” she added.

The Philippines is under a one‑year state of national energy emergency as it faces heightened risk of fuel supply disruptions due to the US-Israel war on Iran which started in early March. As a net oil importer, the Philippines remains highly exposed to global price swings.

Some Association of Southeast Asian Nations (ASEAN) countries also saw muted manufacturing activity in March, as the region’s PMI slipped to 51.8 in March from 53.8 in February.

The Philippines lagged behind Thailand (54.1) and Myanmar (51.5), but ahead of Vietnam (51.2), Indonesia (50.1) and Malaysia (50.7).

For the Philippines, S&P Global said the slower growth momentum for output and new orders were largely due to customer uncertainty amid the Middle East war, citing anecdotal evidence.

“Dampening the pace of increase in total new orders was a fresh decline in new export sales. While the latest downturn was modest, it marked the first month of contraction since last December. Firms noted that the war in the Middle East had led to weaker demand from foreign clients,” it said.

Philippine firms adjusted their production levels, but the pace of growth was “much softer” than the expansion in February. Output was the weakest in three months.

“Reports of higher prices for gas and fuel as well as material shortages led to a further deterioration in vendor performance and, more importantly, renewed increases in operating expenses and factory gate charges,” S&P Global said.

Manufacturers also paused purchasing activity in March, just below the neutral 50.0 mark, which helped ease some pressure on supply chains.

“Higher energy (including fuel and gas) costs and material scarcity, stemming from the war in Middle East resulted in both costs and charges rising in March. This followed slight reductions in the month prior. Moreover, the rates of inflation across both price gauges were historically sharp,” S&P Global said.

In March, job creation continued for a third month in a row, but the rate of growth was marginal and the weakest in three months.

However, Filipino manufacturers were confident that production will pick up in the next 12 months, as they remain hopeful that demand conditions will improve and drive growth.

“The duration and intensity of the war will directly impact the sector’s trajectory in the coming months, as inflationary pressures constrain sales and pricing power,” said Ms. Baluch.

Reyes Tacandong & Co. Senior Adviser Jonathan L. Ravelas said that the March PMI data signals a temporary soft patch rather than a slowdown.

“The decline was mainly driven by weaker domestic demand, cautious consumer spending, and higher cost pressures, which prompted firms to scale back new orders and production,” he said in a Viber message.

“That said, business sentiment hasn’t collapsed. If inflation eases and demand normalizes, we could see PMI stabilize or even rebound next month. For now, it’s more of a pause than a downturn — and companies are clearly staying cautious,” he added.