In a troubling development for the Philippine economy, the country’s sovereign debt has reached an all-time high of P14.1 trillion as of May, according to the Bureau of Treasury.

The continuous rise in debt is attributed to increased borrowing and the weakening of the peso against the US dollar.

With the Bongbong Marcos administration at the helm, critics point to the lack of significant achievements and misplaced priorities, such as the controversial Maharlika Fund, while the nation grapples with high inflation and skyrocketing commodity prices.

Growing Debt and Borrowing Patterns
The recent data reveals that domestic borrowings account for 68 percent of the total debt stock, amounting to P9.59 trillion, marking a 1.4 percent increase from April.

The impact of the peso’s depreciation against the US dollar contributed to the rise in the value of onshore foreign currency-denominated securities by P1.56 billion.

In contrast, foreign debt rose to P4.51 trillion, with an increase of 1.2 percent or P54.73 billion from the previous month. This growth was driven by net availment of external loans and the impact of local-currency depreciation against the US dollar.

The Burden of the Bongbong Marcos Administration
Under the leadership of President Ferdinand Marcos Jr, the administration has managed to add approximately P1.31 trillion to the country’s debt in less than a year.

This surge in debt can be traced back to the COVID-19 pandemic, where the previous Duterte administration heavily borrowed to fund its response efforts. Additionally, the administration’s ambitious infrastructure projects have also contributed to the mounting debt levels.

Questioning the Administration’s Priorities
Critics of the Bongbong Marcos administration are raising concerns about the lack of substantial achievements and the misallocation of resources.

The controversial Maharlika Fund, a program of questionable effectiveness, has drawn significant attention. With the nation facing high inflation and skyrocketing commodity prices, many argue that the administration should focus on addressing these pressing issues rather than investing in questionable initiatives.

Managing Debt and Economic Growth
Despite the alarming rise in debt, economic managers contend that the debt level remains manageable.

They argue that the country’s economic growth has the potential to outpace the cost of servicing the debt. The government asserts that the debt-to-GDP ratio improved to 60.9 percent in 2022, indicating a positive outlook for the economy.