Lubog sa utang

There is no better way of delivering this worrisome message than this tagalog description of our situation: lubog sa utang or drowning in debt.

- BOO CHANCO

Our national debt has hovered around 62 percent of GDP in recent years. Our economic managers are quick to point out that this is only slightly above the commonly referenced 60 percent threshold for “comfortable” debt levels in developing economies.

Acouple of months ago, I had lunch with former Senate president Frank Drilon at his residence. Sen. Frank invited former budget secretary Butch Abad to join us.

From ghost DPWH projects, our conversation turned to our national debt level. I recall Sec. Butch saying that he isn’t as worried about our debt-to-GDP ratio as he is about our national debt growing faster than our economy.

In 2022, our national debt grew by 14.4 percent from 2021 while GDP grew by 7.6 percent. In 2023, national debt grew by 8.9 percent while GDP grew by 5.5 percent. In 2024, national debt grew by 9.8 percent while GDP grew by 5.6 percent.

Debt growth in 2025 (10-12 percent nominal) appears to be larger than GDP growth (projected four to five percent), meaning debt is definitely rising faster than the economy.

In simpler terms, think of the economy as a household whose members earn less than what they borrow.

Sec. Butch expressed concern over what it will cost to service our debt and our government's ability to raise the money to pay principal and interest from taxes and other revenues.

Itis a zero-sum exercise, I recall Sec. Butch explaining. Right at the start of the budgeting process, half of the funds that BIR and Customs are likely to collect must be earmarked for debt service.

That means less funds to build classrooms and hospitals, provide decent education for our children, modernize the armed forces and put up long needed infrastructure. So, we must borrow or tax more to fill the needs gap.