Interest never sleeps

The 2026 National Expenditure Program prepared by the Department of Budget and Management (DBM) and submitted to Congress is set at a record P6.793 trillion. While high expenditures are expected for a growing country like the Philippines, the increasing debt level is concerning, as the government is projected to spend P950 billion on interest payments, with another PI trillion allocated for principal amortization. Movements in interest rates are significant as interest payments are a function of rates and the principal borrowed.

- EJ QUA HIANSEN

Between 1986 and 2010, approximately 30% of the national budget was allocated to interest payments, which restricted productive spending on sectors such as social services and infrastructure. These are still areas where the Philippines is falling behind, showing the cumulative effect of underspending in those sectors. This share reached 36.9% in 2004 when the growing budget deficit, rising public debt, and macroeconomic factors led President Gloria Macapagal-Arroyo to declare that the Philippines was in the midst of a fiscal crisis, warning of a potential debt default. The situation has improved, and the Philippines is now in asignificantlybetter fiscal position, butitis our responsibility to sustain this improvement. Borrowing to finance projects that will bring long-term value to the country is not necessarily a bad thing; however, in the words of J. Reuben Clark,