President Ferdinand R. Marcos Jr.'s shift in rhetoric during his 2026 State of the Nation Address (SONA) may pose challenges to his administration's fiscal position as it continues to grapple with the fallout from the flood control scandal, political analyst Julio Teehankee said.

Speaking last Friday, Teehankee said Marcos' SONA last Monday largely embodied elements of economic populism — a political approach that argues economic policies should primarily benefit "ordinary people" rather than wealthy elites, large corporations, financial institutions or entrenched interests.

“Last year, he used the language of reforms. He appropriated the language of the reform constituency by going after those involved in the flood control mess,” he said.

“This year, apparently, he's pivoting towards a more populist reform. Specifically, economic populism. Because he's giving away a lot of treaties, ayuda here, ayuda there. And, of course, this time around, he also is giving away some benefits for the middle class in the form of assistance.”

Economic populism generally supports higher wages and stronger worker protections, limits on corporate power, policies requiring the wealthy to contribute more, protection of domestic industries and jobs, opposition to corporate bailouts, and efforts to make basic necessities more affordable.

Some of Malacañang's latest initiatives in response to the Gulf conflict, such as the increase in Metro Manila's minimum wage, subsidies for the transport and agriculture sectors, and the proposed scrapping of system loss charges, fall squarely in line with this approach.

Teehankee noted, however, that the government's various social support initiatives could add pressure to the administration's finances and increase its debt burden.

“So the question here, immediately, of course, some business people are asking the question, who's going to pay for all of this? And this will put a lot of pressure on our fiscal position, especially if you're giving away a lot of treaties and then you're cutting taxes,” he said.

“[The] administration is saying, they're going to get it from the P25 billion in public assets that were recovered, or the money that wasn't used for public works, or the cancelled flood control projects.”

The Bureau of the Treasury reported last Thursday that the National Government's outstanding debt climbed to a record P19.07 trillion as of end-June, up P518.98 billion, or 2.8 percent, from P18.55 trillion a month earlier, as the government tapped both domestic and external borrowings to finance its fiscal program.

The latest Development Budget Coordination Committee (DBCC) fiscal program, approved on 8 July, projects a P1.659-trillion deficit for 2026. The DBCC said the fiscal program was recalibrated partly to sustain the government's crisis response amid the Middle East conflict.

The administration has also secured multibillion-dollar loans from the Asian Development Bank and World Bank amid the national energy emergency, which Teehankee said remains another risk the government must address.

“We should address the ongoing fiscal risks of our [P19.07] trillion debt servicing. And, again, the question of how are we going to pay for all the freebies and all the tax breaks. So there's a big possibility that we will borrow more money to pay for that.”