May 20, 2026 l Business Mirror
The Organization for Economic Co-operation and Development (OECD) has come out in late 2024 with a report on the Philippines’s capital market. The findings include that the the Philippines ranks low on corporate governance rankings compared to peer countries and its public capital markets are underdeveloped.
In addition, the OECD found there’s slow activity and high costs in equity and corporate bond markets in the Philippines. Overall, bank and capital markets financing of non-financial sector are low compared to peer countries, the OECD further wrote.
It’s not that we don’t know what ails our capital market. We know; and our regulators and financial market practitioners do have proposed solutions. The OECD report, however, is a third-party validation of our market’s deficiencies, and prods us to greater urgency.
In response, a volunteer working group of representatives from the Capital Markets Development Foundation Inc. (CMDFI), the Institute of Corporate Directors (ICD), the Financial Executives Institute of the Philippines (Finex) and the Center for Research and Communications (CRC), has taken the initiative to conduct a round of consultations with major capital market stakeholders to identify actionable reforms.
The Securities and Exchange Commission (SEC) is being kept posted and the results of the consultative should eventually be made part of an updated “Capital Market Development Blueprint” to be prepared by the SEC itself.
The broad major tasks that the OECD report identified include: improving corporate governance; facilitating access to public equity market; increasing stock market liquidity; facilitating market-based long-term financing via corporate bonds; and, deepening investor base.
These major tasks have to be translated to specific projects or undertakings and, more importantly, assigned to particular stakeholders for accomplishment. The focus is on so-called “low-lying fruits” which are more easily doable immediately. The process of consultations ensures that all major stakeholders have been heard and are on board the reform program. Suffice it to say that there has been a commendable agreement of thinking on the urgency for action.
We give attention to the capital market because significantly, it provides the facilities and network for business enterprises and the government to raise long-term funds from investors. Moreover, capital market financing complements and balances the bank financing which presently dominates the financing of businesses.
Capital raised at the Philippine Stock Exchange (PSE) in 2021 was P234.48 billion, a record high. This year 2026, the amount is a very modest P175 billion (projected).
It is however in and through government securities where the capital market plays a much larger role. The capital market enables the government, through the National Treasury, to do repetitive and recurring fund-raising activities that are so essential to government operations. Weekly auctions to sell government securities are part of the regular financing of government’s revenue shortfalls.
For example, national government borrowings in 2026 are budgeted at P2.68 trillion, P2.1 trillion or 78 percent of which represents domestic borrowing through Treasury bonds and bills. That’s the magnitude of funds raised by government from the capital market.
From another perspective, the national government’s debt-to-GDP ratio, which is the common metric used to determine a “safe” government debt load, has increased from a low of 39.6 percent (2019) to a high of 65.2 percent (March 2026).
Given this very abbreviated narrative, isn’t our capital market and its strengthening worthy of everybody’s concern?
(Acknowledgment: This article liberally draws from the “Capital Markets Reform Initiatives” Report of Dr. Vaughn F. Montes to the BSP Governor, March 23, 2026)
***The views expressed herein are his own and do not necessarily reflect the opinion of his office as well as FINEX. For comments, email santidumlaojr@gmail.com. Photo is from Pinterest.