The Philippines may face increased indebtedness if it fails to meet its 6 to 7 percent economic growth target for 2024, according to a warning from New York-based think tank GlobalSource Partners. While the country’s gross domestic product (GDP) grew by 6 percent in the first half of the year, doubts remain about reaching the target.
“Some think tanks and international development partners have raised doubts about the feasibility of the growth targets. If this happens, we can see more borrowings incurred and the medium-term fiscal sustainability at risk,” GlobalSource said in a statement.
The Marcos administration’s borrowings surged in August, with total gross domestic and external borrowings amounting to P174 billion—up 40.3 percent from the same month last year. In the first eight months of 2024, government financing reached P1.93 trillion, a 17.4 percent increase year-on-year.
This rise in debt is partly due to the country’s fiscal deficit, as government revenue collections of P2.99 trillion have fallen short of the P3.69 trillion in expenditures. GlobalSource also pointed to “legislative insertions” or unplanned budgetary allocations as contributing to the fiscal imbalance.
“There is an imperative to raise more funds, motivated by the need to finance infrastructure projects and social services,” the think tank added.
As of August, the country’s total debt stock stood at P15.55 trillion, raising concerns about how the government will fund the P6.352 trillion budget for 2025. Finance Secretary Ralph Recto has ruled out new taxes, opting instead to focus on improving tax collection efficiency and increasing dividend remittances from state-owned corporations.
