P178-B Increase in Debt Interest Payments Criticized

MANILA, Philippines — House Assistant Minority Leader Arlene Brosas has sharply criticized the proposed increase in debt servicing allocations in the 2025 budget, which is set at P6.352 trillion, arguing that it comes at the cost of essential programs that benefit Filipinos.

Brosas, representing the Gabriela women’s party list, highlighted that the interest payments on the national debt are projected to rise by P178 billion, reaching P848 billion in the upcoming budget compared to P670.4 billion in last year’s General Appropriations Act.

She described the proposed budget as a “debt trap,” warning that it represents a “debt-driven disaster waiting to unfold.”

The lawmaker pointed out that the current administration’s borrowing practices have resulted in each Filipino family owing approximately P558,114, questioning the effectiveness of how these loans have been utilized.

Brosas noted that the government has borrowed an average of P204.7 billion monthly over the past 23 months, which is more than double the borrowing rate of the previous Duterte administration. “The Marcos regime is burying us deeper in debt at an unprecedented pace, while failing to deliver tangible benefits to the masses,” she stated.

She also expressed concern over the allocation of P1.327 trillion, or 20.9 percent of the proposed budget, for the Build Better More program and other infrastructure projects. “How can we justify pouring billions into grand infrastructure projects when basic social services remain severely underfunded? The people are not benefiting from these loans, yet they are burdened with repaying them,” she emphasized.

Brosas urged her fellow lawmakers to carefully review the proposed budget and reallocate funds toward social services that directly benefit the Filipino people. “We cannot prioritize debt servicing and infrastructure while Filipinos go hungry,” she insisted, calling for increased funding for health, education, and livelihood programs.

In a related statement, Finance Secretary Ralph Recto explained that the country’s outstanding debt requiring servicing remains high due to loans taken by the previous administration to address the pandemic. He noted that the total debt rose from P7.7 trillion in 2019 to P13.4 trillion following the pandemic.

Recto attributed the rise in borrowing costs to geopolitical tensions and the subsequent increase in interest rates by central banks to combat inflation. He explained that the country is now refinancing large borrowings made during a period of low interest rates with new debts at higher rates, resulting in an 11 percent increase in interest payments for the coming year.

He clarified that while the total government debt is expected to reach P16.1 trillion by year-end, it is essential to measure this against the country’s gross domestic product (GDP) to assess the ability to repay loans. Recto stated that the Philippines has begun to reduce its debt-to-GDP ratio from 60.9 percent in 2022 to 60.1 percent in 2023, with plans to push it below 60 percent to create a buffer for potential future crises.

The Bureau of the Treasury reported that the total government debt reached a record high of P15.35 trillion at the end of May, primarily due to the depreciation of the local currency against the US dollar. The total obligations increased by P330.39 billion, or 2.2 percent, from the previous month, attributed to the impact of local currency depreciation on foreign-currency denominated debt.

As of May, domestic borrowings accounted for 68.04 percent of the total debt, rising by 4.2 percent to P10.44 trillion, while outstanding external debts stood at P4.9 trillion. Private economists have indicated that tax and fiscal reforms are necessary to bring the debt-to-GDP ratio below the 60 percent threshold considered manageable for developing economies.