Deja debt

Fifty-four years ago last month, on the night of 23 September 1972, Ferdinand Marcos Sr. went on television to announce that he had placed the country under martial law. Congress was shut down soon after, removing a crucial check on executive power and leaving fewer institutional restraints on how public money was spent and borrowed.

Proclamation 1081 had been signed on 21 September, but the public learned of martial law only through Marcos’ televised announcement two days later.

During his 20-year rule, the country’s foreign debt grew from roughly $599 million to about $28 billion. By October 1983, when the government effectively told its creditors it could no longer meet its obligations, borrowing had become a trap from which the country would spend years trying to escape.

The assassination of former Senator Ninoy Aquino that August had frightened banks, which froze their credit, and since the country had been paying old loans with new ones, the silence left it with nothing to roll over.

The economy then shrank in 1984 and again in 1985, and by one widely used count, the share of families living in poverty, which stood near four in 10 when Marcos took office, had climbed to about six in 10 by 1985.

A nuclear plant in Bataan cost $2.3 billion and never produced a single watt, yet the country went on paying for it until 2007, 21 years after the dictator fell. Much of the borrowed money went to friends of the palace, and when those friends could not pay, the public absorbed the losses.

Cory Aquino’s next administration then conducted a political cleansing and expunged the government of anything associated with Marcos, including the vital power generator, resulting in an energy crisis because nothing was ready to take over the huge capacity of the mothballed Bataan Nuclear Power Plant.

Then interest rates rose around the world, and the prices of the country’s exports fell, so the debt pileup became unbearable.

Now the public is being told that things are different, and in some ways they are. About two-thirds of what the government owes today is in pesos, to lenders at home, which is far less dangerous than the dollar debts of the 1980s.

The poverty rate was reported at a record low of 9.7 percent for 2025, although some economists doubt that the poverty line counts everyone who is truly poor.

The impending return of the crisis is troubling. National government debt stood at P19.61 trillion at the end of August, which is P1.9 trillion more than in December, and measured against the size of the economy, it rose from 39.6 percent in 2019 to 63.2 percent at the end of last year and to 66 percent by June, the highest in 22 years.

Debt servicing took 13.4 percent of the budget in 2025 and 14 percent this year, and next year it is proposed to take 15.5 percent, or P1.114 trillion, which is more than the P976 billion proposed for the entire Department of Education.

Then came the scandal. The flood control corruption exposed in 2025 showed that public money vanished into concrete that was never poured, and it helped drag growth to 4.4 percent that year, the slowest outside the pandemic in 14 years, and then to 2.8 percent in the first quarter of this year and 2.3 percent in the second.

Meanwhile, P112 billion in Unprogrammed Appropriations remains in the 2027 proposal, down from P151 billion this year, but still standby money that has been accused of hiding pork project insertions, mostly for flood control, in earlier budgets.

Debt is not inherently dangerous when it builds something that generates more value than it costs. The danger comes when the money is stolen along the way.

The foreign-debt figures tell a similar story. The government’s foreign borrowing rose from $95.1 billion in 2026 to $102.4 billion this year. In peso terms, the increase was nearly 14 percent, partly reflecting the weaker peso, which makes the same dollar-denominated debt more expensive to service.

The saddest part is that ordinary Filipinos have little say in these borrowings and may see little benefit from them, yet they wake up owing the debt all the same.