Geline Salac

Article (news)

Salve Ibaňez

ABS-CBN News

P21.479 trillion. I feel like I am going to burst a vein.Maybe it&#x27;s just my age. When I was covering the economic beats in the late &#x27;90s, everybody still carried the trauma of the debt overhang of the later years of the Marcos Sr. administration. I used to talk to public finance experts regularly and thought, gosh, only a fiscal surplus will satisfy them. Government borrowing lived under the eagle eyes of the Development Budget Coordination Committee, and nobody floated a number like P21.479 trillion without someone in a barong wincing.That&#x27;s where national government debt is projected to land by end-2027, per the Department of Budget and Management&#x27;s own Budget of Expenditures and Sources of Financing (BESF):A 9 percent jump from this year&#x27;s revised P19.765 trillion.A 68 percent climb from the P12.79 trillion President Marcos inherited in June 2022.These days, we&#x27;re a little more forgiving. Economic managers today insist this kind of debt isn&#x27;t a concern. Fine—let&#x27;s look at the facts. Debt, on its own, is morally neutral. It becomes a problem—or stays a non-issue—depending on two conditions, and only two.<div>The Two Conditions of Debt</div>1. It has to spark growth.Kumbaga sa household, pera na hiniram para kumita ng mas malaki can be called good debt. Pera na hiniram para lang magbayad ng ibang utang, o mag-Boracay nang wala namang extra kita—that&#x27;s called bad debt. Same logic: debt for classrooms, ports, and productive infrastructure pays for itself in future tax receipts. Debt that leaks into somebody&#x27;s pocket along the way waits for a growth spurt that never comes.2. The growth of government borrowing can&#x27;t outrun the economy carrying it.GDP grew 2.3 percent in the second quarter—the weakest reading since 2009 outside the pandemic years. Add inflation to that and you get your nominal growth rate, the real number a debt manager should be racing against. If debt is compounding faster than that combined figure, the country isn&#x27;t managing its balance sheet—the balance sheet is managing the country. Right now, on the trajectory the DBM itself is projecting, we are not winning that race.<div>Pano Na? The Fiscal Paradox</div>To complicate his own fiscal picture further, President Bongbong Marcos Jr. used his SONA to propose tax relief:- Raising the income tax exemption ceiling from P250,000 to P350,000.- Exempting small businesses from the minimum corporate income tax.- Offering an amnesty on unpaid income, estate, donor&#x27;s, and value-added taxes.The framing was explicitly tied to Middle East-driven economic strain on the middle class. You&#x27;re proposing to collect less at the exact moment condition two says you need to be collecting more, faster, and cleaner.Pano na nga?<div>By the Numbers: The Debt Trend</div>Let&#x27;s say the overall number is not that bad. Let&#x27;s look at the trend of the cash flow that has to generate the money to pay the total debt. That&#x27;s GDP.National government debt-to-GDP hit 66 percent in the second quarter of 2026—the highest level in 22 years, since the 71.6 percent recorded at end-2004, and a level last seen in 1993, four years before the Asian Financial Crisis. It crept up steadily:63.2 percent at end-202565.2 percent in the first quarter of 202666 percent by June 2026That&#x27;s well past the 60 percent line international lenders and rating agencies treat as the comfort ceiling, and a long way from the 39.6 percent record low the Philippines posted in 2019, pre-pandemic.Government spending is roughly at 20 percent of GDP—with no pandemic left to explain it. Where did it go? Everybody by now knows the answer: into public works with a thin multiplier and large leakages.I went through the BESF line by line like I did when I was covering the beats:Principal amortization is projected to jump 51.5 percent, to P1.590 trillion from P1.049 trillion. This is not because the government is borrowing for new programs, but because pandemic-era loans (many contracted when the peso traded near P49.6 to the dollar) are maturing and have to be refinanced at both a weaker peso (the 2027 budget assumes P62) and a higher rate.Interest payments alone are projected at P1.114 trillion, nearly 16 percent of the proposed P7.2-trillion national budget and 12 percent above this year&#x27;s P995.61 billion.Total debt service comes to P2.704 trillion.Gross borrowings are set to climb to P3.304 trillion—21 percent more than this year—with 95 percent of that increase simply covering rising repayments, not new spending.An economist explained to me that the country needs something close to 5 percent real growth and 9–10 percent nominal growth just to stop the ratio from climbing further. Right now, it&#x27;s still going up. The hope is that by the time this administration hands off in 2028, the line has turned down, not up.<div>Credibility and Competitiveness</div>And finally, we arrive at the tie that binds all of these together. It is not too late to turn all of these around. But we need credibility.Public construction contracted roughly 30 percent this year—a direct drag on growth, and a direct consequence of the flood-control corruption scandal that torched DPWH&#x27;s standing with contractors and markets alike. Secretary Vince Dizon&#x27;s task: restore DPWH spending to prior levels, but only through a screening process tight enough that leakages shrink rather than reload. It&#x27;s okay even if he has to do this with four-letter words. Maybe that&#x27;s the superpower.If he can&#x27;t, we fall further behind our neighbors in the region. The AI and electronics manufacturing boom is lifting Vietnam, Thailand, even bringing Korea and Taiwan along, and has largely passed the Philippines. Listed companies here have barely touched it; except port operator Enrique Razon&#x27;s group, making a real bet on AI infrastructure, says an analyst.Add a Philippines with no strategic petroleum reserve, fully exposed to Middle East-driven fuel shocks already showing up as demand destruction in transport spending and household consumption, and the growth shortfall starts to look structural rather than cyclical.A 66 percent debt-to-GDP ratio is elevated, not catastrophic; the Philippines still holds investment-grade ratings, and this is, credibly, debt used for infrastructure and program loans. But markets price charts, not photographs.I remember what my friend Jun Neri told me recently:&quot;Ang problema natin sa Middle East, Hormuz. Ang problema natin dito, Hermes.&quot;

P21.479 trillion. I feel like I am going to burst a vein--that's where national government debt is projected to land by end-2027.

P21.479 trillion. I feel like I am going to burst a vein--that's where national government debt is projected to land by end-2027.

Boardroom Tea: Chronicle of a Debt Foretold

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Boardroom Tea: Chronicle of a Debt Foretold

Salve Ibaňez,

ABS-CBN News

Published August 13, 2026 08:54 AM PHT

Read More:

sovereign debt

national debt

borrowings

economy

Boardroom Tea

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