Managing the debt level properly, thus, is critical to sustain economic growth.
The country’s increasing debt level has alarmed many Filipinos. Critics have feared that future generations will unfairly inherit the enormous debt and suffer the consequences of higher spending.But accumulating debt per se is not poor economic management. Borrowings are supposed to be plowed back into the economy to fund investments in areas such as infrastructure, agriculture, education and social services. These, in turn, lead to economic expansion that generates jobs.Only a handful of countries are debt-free, namely Brunei, Macau, British Virgin Islands, Liechtenstein and Palau. These nations have a small population to feed and have just enough to provide social services.It’s a different story when a country has a big population that demands infrastructure, connectivity, and social and housing services. If revenues are not enough, governments resort to borrowings to fund the needs of a growing population.Managing the debt level properly, thus, is critical to sustain economic growth. Keeping the debt level below the international threshold of 70 percent of the gross domestic product (GDP) is responsible management—it is an indication that a country is producing more than it owes.The Philippines is one country that continues to pay interest on its debt without refinancing and without hampering economic growth.The Philippines has reduced the national government’s debt-to-GDP ratio to 60.7 percent in 2024 through a prudent debt management strategy. With the economy projected to grow to about P36.8 trillion by 2028, faster than its obligations, the government remains on track to reduce the debt-to-GDP ratio to below 60 percent by the end of President Ferdinand Marcos Jr.’s term.Accordingly, Vice President Sara Duterte’s potshot at the country’s P16.75-trillion debt is absurd. Ms. Duterte is wondering where the debt proceeds had gone.She should be reminded that the biggest jump in public debt didn’t occur under the Marcos administration. It happened under her jailed father’s reign.The administration of Rodrigo Duterte added P6.84 trillion in debt, or more than all six previous administrations combined had incurred.President Marcos in 2022 inherited P12.79 trillion in obligations, partly because of the massive funding required in containing the COVID-19 epidemic and a handful of big-ticket infrastructure projects.The P6.84-trillion debt incurred during President Duterte’s administration surpassed the combined borrowings of all previous governments: Ferdinand Marcos Sr. (P365 billion); Corazon Aquino (P372 billion); Fidel Ramos (P681 billion); Joseph Estrada (P766 billion); Gloria Macapagal Arroyo (P2.40 trillion); and Benigno Aquino III (P1.37 trillion).As of end-April 2025, the national government’s total outstanding debt stood at P16.75 trillion. The Department of Finance noted that this level is relatively lower than most other Asian countries based on available data. Japan’s total debt is at P485.94 trillion, Singapore’s at P53.68 trillion, South Korea’s at P46.89 trillion, Indonesia’s at P31.37 trillion and Thailand’s at P17.73 trillion.The country’s fiscal deficit, meanwhile, has steadily gone down to 5.7 percent of GDP in 2024, a significant improvement from the pandemic peak of 8.6 percent in 2021, 7.3 percent in 2022 and 6.2 percent in 2023. It is projected to decline further to about 3.8 percent by 2028.The government’s strict adherence to fiscal discipline has recently earned it a credit rating upgrade of A- from Japan’s Rating and Investment Information Inc. (R&I) and an outlook upgrade to positive from S&P Global.The upgrades signal high investor confidence in the Philippines’ economic performance, increasing interest in Philippine bonds and lower borrowing costs for the government.The Vice President’s grasp of national debt reflects her limited experience in national governance. Before 2022, her track record was confined to Davao City. Running a city, however large, is not the same as steering an economy of 115 million people.If the Vice President is still wondering where the proceeds of the government’s borrowings went, she might want to check her own office’s books. The budget she is now questioning helped fund her “sympathy trips”—right in the middle of a global military conflict—and her controversial confidential funds, too.E-mail: rayenano@yahoo.com or extrastory2000@gmail.com