PH posts leanest GOCC debt load – Fitch

MANILA, Philippines – The Philippines posted the lowest state-owned enterprise (SOE) debt burden among six emerging Asia-Pacific markets with declining state support in recent years, Fitch Ratings said.

In a special report, Fitch said the debt burden of SOEs relative to gross domestic product (GDP) stood at just 1.1 percent in the Philippines.

It added that this was lower than in Indonesia, Thailand, India, Malaysia, and China, where state-linked firms carry significantly heavier debt loads.

READ: PH may face first credit downgrade in decades as Fitch turns ‘negative’

Meanwhile, explicitly guaranteed debt—where the government is legally obliged to repay if an SOE defaults—was logged at 1.5 percent.

In the Philippine context, SOEs refer to government-owned and controlled corporations (GOCCs).

“Several SOEs in emerging markets are inefficient or loss-making, mostly due to having to fulfil social mandates in light of their economies’ development needs,” Fitch explained.

“This means the government has to step in to provide support, which can be explicit or implicit,” it added.

Against this backdrop, the Philippines also recorded easing subsidy levels, with support to GOCCs on a downward trend since the pandemic, reflecting tighter fiscal management and limited budget space.

By 2025, subsidies had fallen to below 0.5 percent of GDP, among the lowest in Southeast Asia.

READ: Subsidies for state-run, owned firms surged 71% in March

Data from the Bureau of the Treasury showed that budgetary support to GOCCs fell by 22.9 percent to P106.9 billion in 2025 from P138.7 billion in 2024, marking the lowest level since 2016’s P103.2 billion.

The decline comes as the Department of Budget and Management (DBM) implemented stricter budget controls, including “hard budget constraints” on GOCCs under the 2025 national budget.

For 2026, however, the government has earmarked P264.82 billion for GOCCs, more than double the P127.43 billion programmed for 2025.

Still, the DBM said it will flag GOCCs that have remained highly dependent on subsidies for at least 10 consecutive years, which may be subject to mandatory institutional review.

“The FY 2027 budget aims to intensify optimization of budgetary support to GOCCs in response to the call to reform the public corporate sector in light of tight fiscal resources,” the DBM earlier said. /pai