The Marcos Jr. administration is technically bankrupt and one vivid evidence of it is more than half of Filipino families consider poor and hungry, miserable and with practically no chance of escaping from the clutches of destitution. It has been incapable of energizing the economy despite the promise of private-sector collaboration to uplift the sorry state of the nation.
When a country’s debt growth soars faster than the gross domestic product (GDP), the result is that the debt cannot be sustained and will eat deeper into the economy and attack the belly of each citizen. Squandering taxpayer money the way Sara Zimmerman Duterte Carpio did with the budgets of the Office of the Vice President (OVP) and the Department of Education (DepEd) that she shepherded to a fiscal quicksand and crafting a national budget that intensifies billions for pork barrel spending by way of dubious public works projects and dole-outs for the benefit of favored partylists, the Marcos Jr. regime has proven that his Team Unity is actually Team Impunity.
Since the Marcos Jr. regime has been sustaining fiscal mismanagement, there will be no chance that its revenues would march its expenditures, leading to a situation in which the state has to borrow billions monthly to pay for foreign and local debt amortization on principal and interest. Indeed, floating bonds in the market have been its best tool to generate cash, but with the bond market getting better yields than the stock market, corporations and banks would just park their money on short-term bonds to earn paper profits.
Illustrating just how bad the debt situation was, former NEDA director-general Cielito F. Habito wrote in his Philippine Daily Inquirer column on Sept. 24, 2024: “Did you know that exactly 20 years ago, practically all or 99.5 percent of taxes our government collected went to servicing its debt? Imagine a heavily indebted wage worker who, on payday, only gets to keep a meager 50 centavos out of every P100 in the pay envelope, and must hand over nearly everything else to the neighborhood ‘5-6’ lender.” The president at that time was economist Gloria Macapagal Arroyo. Tax revenues that year were P605 billion and debt service payments was P601.7 billion, divided into P260.9 billion for interest payments and P340.8 billion for the principal amortization. Arroyo had to borrow money to prop up the P101.3 billion of non-tax earnings from fees and P420 million in privatization proceeds.
President Ferdinand R. Marcos Jr. is doing as bad as his father, figures from the Department of Budget and Management (DBM) as he had already borrowed P2.423 trillion and is racing to surpass the disastrous borrowing record of his predecessor Rodrigo Duterte, who reversed course from the fiscal prudence of the late President Benigno “Noynoy” Aquino III. Duterte borrowed P7.329 trillion to add to the P6.09 trillion accumulated debt he had inherited. Worse, Habito argued, debt grew 300% faster than GDP did. The consolidated public sector deficit (CPSD) soared to 8.6% and 7.3% of GDP in 2021 and 2022, respectively. With its unlimited borrowings, the government pushed the per capita debt by more than 300% from P45,652 in 2004 to P138,764 today.
The late President Ferdinand Marcos Sr. left behind a total outstanding debt of P395 billion, and CPSD, which is the excess of all public sector spending overall government tax and non-tax revenues, of P36.2 billion, which was universally huge by 1986 norms as it was 5.7% of GDP, nearly twice the 3% threshold for a sustainable level of deficit. Under the Marcos Sr. martial law government, the Central Bank was discovered to have overstated its reserves by $ 600 million, turned to the Binondo Central Bank (BCB) to secure its dollars and suspended debt repayments as foreign exchange became scarce. To ensure that BCB abides by the “rules,” a key player was eliminated by still-unidentified gunmen.
Yet, the situation would not have worsened had not Filipino politicians and bureaucrats imbibed the American pork barrel system introduced into the then-US colony in 1920. The system has become the miasmic feature of the annual budgetary process, when Congress, in the exercise of the power of the purse, would craft the yearly appropriations for all government instrumentalities. Last year, the Marcos Jr. regime had a budget of P5.768 trillion but to finance it, the Department of Finance (DOF) borrowed P2.46 trillion as government revenues were 42.65% short. This year, the budget ballooned to P6.326 trillion, and the regime is borrowing P2.545 trillion as revenues are down 40.23%. Estimates place the national debt at P17.353 trillion by yearend and will skyrocket to P20 trillion when it’s time for Marcos Jr. to vacate Malacanang.
The Philippines will continue to be an “aliping bayad-utang” in the community of nations until it stamps out the scourge of graft, with both the International Monetary Fund (IMF) and the World Bank (WB) claiming that up to 20% of the annual budget is lost to graft. There might be some disagreement about the figure but in the past, Japanese contractors had to cough up 15% of construction budgets to win contracts during martial law while Filipino contractors pay through the nose, some say up to 40% of the projects in congressional districts. The bleeding will continue as lawmakers have creatively manufactured their own doleouts like the P26-billion AKAP, P15-billion TUPAD and P45-billion AICS, all designed to buy votes in May 2025. The tragedy of the 2025 national budget is not that the bicameral conference committee (BCDC) had submitted a bill with 10 blank pages. The nightmare lies in the 4,047 pages loaded with trillions of numbers. (DIEGO MORRA)
