In order to meet the Marcos administration’s spending requirements, the national government had to borrow over P1.4 trillion in the first half of the year due to a lack of sufficient funds.

Based on the Bureau of the Treasury report, gross borrowing of the Marcos administration amounted to P1.423 trillion from January to June 2023, higher by 33 percent compared to P1.07 trillion in the same period last year.

Gross borrowing refers to the total amount of money that the government takes as loans or borrows from local and foreign sources to meet its required expenses and address budget deficits.

The treasury data revealed that the main driver of this uptick, equivalent to around P353 billion, was the 42 percent increase in borrowing from local banks and Filipino investors.

The government borrowed a total of P1.056 trillion in the domestic market, marking a significant rise of P314.74 billion from P741.26 billion a year ago.

The Treasury reported that the government generated P686.15 billion through the sale of long-term IOUs, P283.76 billion through retail bonds, and P86.58 billion through short-term debt papers.

Meanwhile, the amount of money the government borrowed from foreign creditors increased by 11 percent to P366.44 billion, compared to P329.33 billion in the previous year.

Out of this amount, P163.61 billion came from commercial borrowing, while P145.05 billion and P57.78 billion were program and project loans, respectively.

Commercial borrowing involves obtaining funds from foreign private banks or companies, while project loans are specifically utilized to finance infrastructure projects.

Program loans, on the other hand, contribute to supporting wider government social welfare initiatives like the Pantawid Pamilyang Pilipino Program (4Ps).

The January to June gross financing accounted for 64.68 percent of the Marcos administration’s full-year borrowing ceiling of P2.2 trillion.

In June alone, the government borrowed P166.49 billion from domestic and offshore markets, marking a 14 percent increase compared to P146.17 billion borrowed in the same month of 2022.

Not all borrowed money used for budget

National Treasurer Rosalia V. De Leon said the government relies on borrowed funds because its expenses exceed the amount of money it collects in revenue, leading to a budget deficit that needs to be covered through borrowing.

However, not all the money the government borrows is used to bridge its budget deficit. Some of it goes towards repaying previous loans and the interest on those loans.

The Marcos administration incurred a budget deficit of P551.7 billion from January to June 2023.

As of June 2023, the total debt of the national government stood at P14.148 trillion, still short of the full-year program by 3.2 percent or P475 billion.

Borrowing is not bad

In 2024, the government plans to borrow over P2.46 trillion to fund portions of the proposed P5.768 trillion national budget of President Marcos. 

National Economic and Development Authority Secretary Arsenio M. Balisacan said that seeking loans from both foreign and local banks is necessary given the government's limited budget.

“A country just like us has so many development needs, like infrastructure. If we want to grow fast, we have to access external and internal resources,” Balisacan said during a recent Senate budget hearing.

“The only problem is if you borrow and if you use it wastefully, then you will be in trouble,” Balisacan said. “But I think that's our problem in the past.”

For his part, Finance Secretary Benjamin Diokno said that if the government decides not to invest in infrastructure projects, the revenues from taxes would be more than enough to cover the expenses required to maintain the country's current state.

“We always complain we suffer in comparison with our Asian neighbors but they have been investing [in infrastructure] for a long, long time, around 10 percent of their GDP [gross domestic product],” Diokno said.

The Marcos administration has committed to sustaining the annual infrastructure spending at about five percent to six percent of GDP until 2028.

“Can you imagine if we don't spend for infrastructure, we will have a [budget] surplus. But we need to invest to expand the economy,” Diokno said.

The national government's debt is projected to reach P15.842 trillion by the end of 2024.

Source: Manila Bulletin (