As the House of Representatives just concluded budget deliberations on the proposed P7.2-trillion national budget for 2027, the final full-year budget for the Marcos administration, University of the Philippines School of Economics professor JC Punongbayan highlighted major concerns surrounding government spending.
The government faces a revenue shortfall of over P1 trillion every year. Punongbayan noted that every deficit adds to the country’s outstanding debt, which currently stands at a record high of P19 trillion. The debt-to-GDP ratio is approximately 65 percent and rising, according to his estimates.
He flagged this trajectory as a major concern, warning that high debt servicing could reduce funds available for critical sectors such as education, infrastructure and social protection.
“That only means that the interest that we’ll have to pay for our debts is only expected to be higher in the future,” he said.
Punongbayan added that around 40 percent of the P7.2-trillion budget is already committed to automatic obligations like the National Tax Allotment (NTA) and debt interest payments, leaving a much smaller pool of discretionary funds for government departments.
However, he clarified that running a deficit is not inherently bad for a developing country: “We need to make sure that the things we spend on are quite productive and will help us pay for all the debt that we have accumulated.”
The Philippines continues to face a significant infrastructure gap despite years of heavy capital outlay, largely due to the nation’s archipelagic geography and severe urban traffic congestion.
“Even if you remove corruption in government, that doesn’t remove the fact that we will need a lot more infrastructure to connect our islands and make sure that traffic is abated, which, by the way, also poses significant losses on the economy, billions of pesos per day,” Punongbayan pointed out.
