Overdose economics

Overdose economics | Daily Tribune

By the end of last year, the estimated 117 million Filipinos, including infants, owed about P151,000 each as their share of the government’s P17.71-trillion debt.

Though largely theoretical, the burden is ultimately borne by the working class through taxes and by the business sector through earnings from trade.

A breakdown of the proceeds from borrowings during the term of President Ferdinand Marcos Jr. showed that only a tiny amount was allocated to improving the lives of Filipinos.

The debt-to-gross domestic product (GDP) ratio has exceeded 60 percent, with the stated 2026 borrowing strategy indicating continued high interest payments, though economic officials maintain that the debt level remains manageable and sustainable with steady, robust growth.

Growth skidded to 4.4 percent last year from 5.6 percent a year earlier, with repercussions for the administration’s continued reliance on debt.

Under the Marcos administration, gross borrowings have totaled P8.4 trillion, with a significant portion recycled for debt servicing rather than new development spending.

Under the budget process provided by the Constitution, debt proceeds are integrated into the General Appropriations Act (GAA) through the Budget of Expenditures and Sources of Financing.

Debt service for interest and principal, however, is automatically appropriated, meaning it doesn’t require annual congressional approval and takes priority.

This ensures that obligations are met, but in the process it crowds out funding for other priorities like education and health.

The Palace said the Marcos administration inherited P12.79 trillion in debt from the Duterte administration which recorded a ballooning debt, but which was necessary to cover Covid-related spending and the restart of infrastructure projects delayed by the global pandemic.

From mid-2022 to the end of 2025, or about 3.5 years under Marcos, the net debt increase was approximately P4.92 trillion.

The accumulated borrowings or total new debt are significantly higher due to the refinancing of maturing obligations.

The 2026 plan calls for P2.68 trillion in new borrowings, split into P2.05 trillion from domestic sources and P627 billion from external sources, to fund a targeted P1.65-trillion deficit.

Total debt service payments during the term of Marcos reached P6.47 trillion, or an estimated 77 percent of gross borrowings which, in layman’s terms, would be 77 centavos for every P1 in debt. The remaining 23 centavos borrowed is used to fund the budget deficit.

However, the budget is heavily burdened by discretionary “pork barrel” funds for politicians, which, under Marcos, was facilitated through unprogrammed appropriations (UAs) rather than directed toward broad development or poverty alleviation.

In the distant past, under the administration of Ferdinand Marcos the elder, borrowings funded corrupt and inefficient projects, crowding out social spending.

Overall, debt service has consumed nearly half of public revenues in recent years, limiting funds for education, health, and infrastructure.

The government claims that borrowing supports growth; however, this claim becomes untenable given that economic growth has lagged behind debt accumulation since 2022.

The inflated UAs, which are financed mostly through borrowings, point to the increase in pork barrel allocations in the budget, which persists in the 2026 GAA.

UAs are supposedly standby or “contingent” funds, not part of the programmed budget, but are released by specific triggers.

The UA is discretionary, allowing allocations to pet projects of the President, lawmakers, and local officials with limited oversight.

It grew from less than P100 billion in 2019 to P807 billion in 2023 and P731 billion in 2024. Total UA in 2026 was trimmed to P150.9 billion after Marcos exercised his veto amid the public uproar over its existence.

In many ways, Marcos’ addiction to debt spells hardship for many Filipinos, particularly the victims of the increasing frequency of floods.