| Photo by Mari Gimenez on Unsplash
The Philippine Department of Budget and Management (DBM) announced that the Philippines is set to spend more to service its debt this year, primarily due to the maturity of most of the loans made during the COVID-19 pandemic and the depreciation of the Philippine peso. Under the proposed National Expenditure Program (NEP), the Philippines will be spending P876.7 billion for debt payments next year, accounting for 13.8% of the P6.352 trillion budget the government has allocated for 2025.
Compared to the typical household, anyone will tell you that setting aside money for debt repayment on top of additional debt to pay for ongoing overspending that will account for over 30% of your household income is insane.
This revolves around the reality that budgets for education, health care, and food are sorely inadequate without having to account for the known phenomenon of natural disasters that befall the country each year, such as typhoons—around 20 of them.
Then there is the talk of reducing interest rates, which seems benign and needed until foreign exchange traders decide the Philippine Peso must necessarily devalue. For a country that suffers from importing even the components of its material exports, the net effect would be further currency devaluation and resulting inflation from imported inputs and energy.
If the U.S. follows through on its announcement of $500M in military aid and somehow finds its way into calculating the GDP, the false sense of a higher GDP will further mask the persistent and ever-burgeoning income disparity between the billionaire class and every other Filipino.
To be fair, it must be noted that around 70% of Philippine debt is owned by Filipinos—meaning by the banking system and its well-to-do clients; overseas investors own the rest. How much debt is too much debt? How much of the needed new borrowing can be sustained by the locals—the same locals that the government taxes while it borrows from them?
“To be fair, it must be noted that around 70% of Philippine debt is owned by Filipinos—meaning by the banking system and its well-to-do clients; overseas investors own the rest. How much debt is too much debt? How much of the needed new borrowing can be sustained by the locals—the same locals that the government taxes while it borrows from them?”
Printing more money is always possible, but it has its limits before the deleterious effects surface—before the new money turns into worthless monopoly money.
Then there is the sense that not every peso borrowed and invested by the government is actually spent as intended, instead of the usual graft and corruption that happens while paving every kilometer of road, bridge, or other government project.
Then there’s the festering fear of a repeat of the ‘golden years’ of nearly half a century ago – before the majority of Filipinos were born – the same demographic that voted in great numbers last 2022 – whereby the financial collapse brought on by you guessed it, more debt than the economy can handle just happened to justify draconian measures, including detention of those who had opposing views, maybe what the great architects of our time really have in mind – a return to that time of unicameral rubber-stamp legislature, or worse, legislation by decree, and zero term limits.
‘Back to the future?’ The hilarious movie aside, there seems to be a lack of good men. The few remaining will do nothing, simply guaranteeing evil men will rule our destiny, for which we inadvertently will all suffer.
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ABOUT THE AUTHOR: Dr. Crispin Fernandez advocates for overseas Filipinos, public health, transformative political change, and patriotic economics. He is also a community organizer, leader, and freelance writer.