It seems that not a few citizens are now wondering where all these money — recently being distributed by government to selected beneficiaries — actually come from.
Was there any financial windfall that needed to be released through such doleouts? Or maybe the doleouts were financed by local or foreign debts?
Last year, Senate Minority Leader Aquilino “Koko” Pimentel III expressed grave concerns regarding the rapid escalation of the country’s national debt, which is on track to reach an unprecedented P15.8 trillion by the end of the year — burdening every Filipino with a staggering debt load of P141,000.
Senator Pimentel opined during the briefing regarding the proposed budget outlay: “How come Filipinos should not worry about their ballooning debt? Ballooning na rin yung principal at debt payments and yet, ballooning pa rin yung total amounts to be paid,” he wondered. “Imagine households buried in debt! Ganyan ka-delikado ang ating sitwasyon,” the Senator warned.
Records show that the national debt of the Philippines is the total debt, or unpaid borrowed funds, carried by the government which, as of February 2024, was recorded at P15.18 trillion.
A major threat to the national government’s fiscal position is the large stock of government debt, and the associated costs of servicing it.
In the 1970s and 1980s, large debt inflows were used to stimulate the economy, and to provide a cushion against external shocks that had often plagued the economy in the early years of its development.
In the 1990s, it also became a means to service the liabilities of ailing government agencies.
By this time, domestic resources have become a significant part of Philippine public debt, reflecting the government’s struggle to service its foreign debt, while incurring fiscal deficits.
Were the loans used to finance projects that will bring revenue to the government — known as productive debt? Were they self-liquidating in nature? (irrigation, power projects, infrastructure, etc.) Or were the loans a net burden on the community, known as unproductive debts? Is the government charging additional taxation for service and repayment for unproductive debts?
According to an assessment by the Asian Development Bank, the government debt situation is not sustainable as far as the present regime is concerned, which likened the Philippine government as playing a weakly feasible debt Ponzi game.
These results indicate the vulnerability of the debt situation, and shows that the government is facing a high risk of running into a debt crisis in the event of a major adverse shock to the economy.
The findings provide strong support to the warnings about the critical government debt situation, and highlight the difficulty and the urgency of improving the government’s fiscal position in the present Philippine economy.
Any policy aimed at addressing the debt sustainability problem must take into account not just its effect on debt but also its effect on other economic variables, such as interest rates, and the overall economic growth — which are themselves factors that determine debt sustainability.
Did our government heed the warnings of a possible debt crisis?
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