Debt addiction relapses

Recent government data bared a troubling rise in government borrowings to support government spending.

The incumbent administration has now recorded the highest monthly average debt increase among recent administrations, including the previous administration of President Rodrigo Duterte that faced bigger fiscal challenges, such as addressing the Covid-19 pandemic and the 2017 Marawi siege.

According to Bureau of the Treasury data, from June 2022, when President Ferdinand Marcos Jr. took office, to last April the national debt increased from P12.79 trillion to P16.75 trillion, a rise of approximately P3.96 trillion over 34 months. This translates to a monthly average increase in debt of P116.47 billion.

The national debt translates to each of the 112.6 million Filipinos owing P147,653 to banks and other financial institutions.

In contrast, the Duterte administration, from 2016 to 2022, increased the debt level from P5.9 trillion to P12.79 trillion, or P95.83 billion per month.

Under the late President Benigno Aquino III, from 2010 to 2016, the debt grew from approximately P4.7 trillion to P5.9 trillion, averaging about P16.67 billion per month.

During the nine years of President Gloria Arroyo’s administration, from 2001 to 2010, the debt rose from P2.2 trillion to P4.6 trillion, averaging about P22.22 billion per month.

By June 2022, before President Marcos took office, the national debt stood at P12.79 trillion, more than twice that of President Aquino. The rapid increase was driven by borrowing to address the pandemic, which required significant spending on social amelioration programs, healthcare, and economic stimulus.

The community lockdowns deprived the economy of activity, leading to a sharp contraction in the gross domestic product (GDP) of 9.5 percent in 2020, which reduced government revenues and necessitated increased debt.

Duterte’s “Build Build Build” infrastructure program also relied heavily on loans, which contributed to the debt stock.

To its credit, the Marcos administration has prioritized economic recovery following the disruptions caused by the pandemic, resulting in growth rebounding to 8.3 percent in the first quarter of 2022.

Major projects, such as railways, airports, and energy facilities, were pursued under the rebranded Build Build Build More initiative.

The debt-to-GDP ratio slightly declined from 61 percent in June 2023 to 60.9 percent in mid-2024.

The indicator, however, worsened to 62 percent in the first quarter of 2025 after an increase in borrowing supposedly to “frontload expenditures.”

The period coincided with the time questions were raised about the misuse of the budget, such as the increase in unappropriated allocations to accommodate pork barrel projects ahead of the midterm polls.

The ratio remains above the 60-percent sustainability global norm, indicating potential risks.

According to data from the Asian Development Bank and the International Monetary Fund for 2023, Indonesia has a debt-to-GDP ratio of 39.9 percent, with monthly debt increases lower than the Philippines, due to a smaller budget deficit.

Thailand has a ratio of 61.4 percent, similar to the Philippines, but with lower debt growth.

Malaysia’s debt profile was at 67 percent, but more substantial fiscal revenues and export performance support it.

Automatic debt servicing limits funds for education, healthcare, and poverty alleviation.

The rising figure may indicate a failing strategy, as economic growth outpacing debt accumulation is unsustainable. To accommodate rising borrowings, mostly from domestic sources, the GDP will need to grow at a clip of 6.5 percent to 8 percent.

This target is challenging to attain with public funds primarily allocated to programs that foster patronage politics.