Imagine the struggle of having to borrow nearly half of your monthly wages just to meet the basic needs of your family. Now, envision a scenario where you have accumulated excessive debt, partly due to a health crisis and also because of a policy of relying on loans to fund your family’s lifestyle. On top of that, imagine a lack of financial control, leaving you unsure if the borrowed money is being utilized wisely or appropriately.
Now, let’s expand this situation on a national scale to encompass 110 million Filipinos. This is the cause for concern expressed by citizens like former senator Panfilo Lacson when he recently exclaimed, “God save the Philippines,” on social media in response to the government’s plan to borrow P2.46 trillion for next year’s national budget. He questions how much of these loans may have been misappropriated or stolen.
To put things into perspective, the P2.46-trillion borrowing program is intended to supplement the proposed P5.77-trillion national budget for next year. This loan amount represents a nearly 12% increase from this year, as a result of the government’s revenue shortfall from taxes and customs duties. In other words, 43% of the 2024 budget will rely on borrowed money rather than earned income. This means that the Philippines will, once again, be living beyond its means, a pattern observed in recent years.
Debt itself is not inherently negative. Prudent use of debt can contribute to the country’s development and future growth. Responsible borrowing can finance infrastructure projects that attract foreign investments and create more job opportunities for Filipinos, leading to economic progress. Additionally, effective debt management can allocate more resources for human development and safeguard against health crises like the ongoing COVID-19 pandemic.
However, when debt is accumulated beyond sustainable levels, it can detrimentally impact individuals, households, and even nations. The government’s substantial spending next year is necessary to ensure the country’s recovery from the severe economic crisis it has faced since World War II. As the saying goes, “one has to spend money to make money.” However, it is crucial for the Marcos administration’s economic team to execute spending borrowed funds efficiently and conscientiously, minimizing the risk of corruption and mismanagement.
One alarming trend that has emerged recently is the public’s desensitization to scandals and bad news. Just as inflation becomes accepted as a part of life, Filipinos have also grown accustomed to “scandal inflation.” Even cases like the Pharmally scandal, involving questionable state procurement contracts worth around P11 billion during the height of the government’s COVID-19 response, barely elicit a response from the average citizen. This growing indifference towards the possibility of corruption poses a challenge to our fiscal authorities.
The fact that the sole protest comes from a former senator, whose repeated warnings about government budget abuses have often been ignored, should not breed complacency among our economic managers. The public’s lack of concern regarding aggressive borrowing at a time when the country’s debt already exceeds what is considered prudent (i.e., 60% of GDP) does not grant authorities the license to neglect the associated risks. Instead, this situation is a call to action for the administration, particularly those responsible for fiscal affairs, to ensure that the country’s limited resources and borrowed funds are utilized judiciously and protected against theft, despite the public’s indifference.
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