WITH THE NATIONAL debt hair thin shy of breaching P19 trillion as of end-May, several groups allayed fears of an impending debt crisis that could even be more difficult for the country and future generations to handle.
Thus, a press conference held by e Freedom from Debt Coalition and the AIDS Healthcare Foundation (AHF)–days before the President delivers his fourth State of the Nation Address–said that debt payments could far exceed the government’s budget allocation on health and social services.
So far the government has allotted a budget for social services of P2.599 trillion under the 2026 General Appropriations Act–to include P1.295 trillion for education, P477.3 billion for local government units and P458.4 billion for health.
Data from the Bureau of Treasury showed the government has already spent a total of P1.149 trillion on debt service as of end-May or 63.5 percent higher than the P702.968 billion it paid for the comparative period last year because of principal repayment on local debts that surged 269.92 percent year on year to P630.367 billion from P170.403 billion, according to Business Mirror.
In contrast, repayments on external debt fell by 44.13 percent to P97.847 billion from P175.164 billion.
FDC Secretary General Rovik Obanil told Business Mirror that while not inherently wrong, borrowing should serve only as one of the myriad of tools at the government’s disposal to strengthen the economy.
Obanil claimed that the government seems to use borrowing as a crutch to source funds, with Filipinos suffering the brunt “through taxes and poor healthcare and social services.”
“Debt accountability is really important. There are policies that should be implemented to ensure that the borrowed money is used to improve the economy,” he told reporters on Tuesday.
Independent Debt Audit
Obanil also urged the government to repeal the automatic appropriations law.
“We’re also advocating for an independent debt audit. We have a lot of debt, but we can’t see what they are used for. It’s crucial that we get to monitor where the debt went, and if we benefited from it,” he said.
AHF Country Program Manager Ryan Guinaran underscored the need to reform the global government debt system, as developing countries are slapped with higher interest rates compared to developed nations.
“Developing countries are really at a major disadvantage. The interest rates for these nations are about three to 10 times higher than when developed countries borrow funds,” Guinaran said.
With this, he called on the Philippines to participate in the UN-backed initiative dubbed Borrowers’ Club, established to provide developing nations a platform in global debt discussions.
“This is so that the Philippines can advocate for more just lending practices because it’s a system that abuses developing countries,” Guinaran said.
Think Tank’s Perspective
The IBON Foundation said the surging national debt is a heavy and unnecessary burden on ordinary Filipinos and that the ‘record-breaking borrowing binge” has largely failed to translate into genuine development, robust domestic production, or substantial social assistance for struggling families.
Its core criticism on the surging debt are:
Bloated Debt Servicing: A massive portion of scarce fiscal resources is diverted to paying off interest and principal on loans rather than funding social services like healthcare, education, and direct financial aid.
Misplaced Priorities: Instead of subsidizing small businesses and agriculture amid inflation, the government’s borrowed funds are disproportionately allocated to massive infrastructure projects and “pork barrel” legislative insertions, which IBON claims enrich powerful interests rather than helping the poor.
Increasing Per Capita Burden: With the outstanding national debt reaching record highs (exceeding P 18 trillion), IBON this translates to a massive financial liability for every Filipino household.
Stance on UMIC upgrade
The IBON criticized the World Bank’s reclassification of the Philippines into the upper-middle-income tier, arguing it is the “worst possible place” for the country.
Loss of Concessional Loans: The upgrade threatens to shut the country out of low-interest concessional loans.
Higher Borrowing Costs: The government will likely be forced into stricter, market-based borrowing terms with significantly higher interest rates.
To address the debt crisis, IBON advocates for systemic changes in fiscal policy:
Progressive Taxation: Shifting the tax burden away from indirect consumption taxes (which burden poor and middle-class Filipinos) and onto the accumulated wealth of billionaires and large corporations.
Reallocating Budgets: Directing public spending into tangible socio-economic investments—like localized ayuda, hospital facilities, and direct subsidies for farmers and local micro, small and medium enterprises (MSMEs)—which have a higher multiplier effect on the economy.