The Philippine government collects only about 14 to 15 percent of gross domestic product (GDP) in revenue while spending between 24 and 25 percent, and a former central bank official says that gap is steadily eating into the money left for the administration’s remaining promises.
Diwa Guinigundo, a former deputy governor of the Bangko Sentral ng Pilipinas (BSP) who is now an analyst at GlobalSource Partners Philippines, said on BNC’s “Bankero Unfiltered” that the imbalance leaves the government with an annual budget deficit of around P1.5 trillion.
“If this trend continues and we are reducing the fiscal space, what happens to both the fiscal deficit-to-GDP ratio and the debt-to-GDP ratio? We will have very, very little resources to go by to fund all of those commitments in the State of the Nation Address,” Guinigundo said.
Borrowing to plug that shortfall has lifted national government debt to roughly P18.5 trillion as of May. Guinigundo placed the debt burden at 65.2 percent of GDP, above what he considers the 60 percent threshold.
“That contributes to more debt. And what is the debt right now? I think as of May, it’s about P18.5 trillion, which is about 65.2 percent of GDP. That’s a lot because the threshold is about 60 percent,” he said.
The fiscal squeeze comes as the country sits barely above the line for upper-middle-income status, a classification Guinigundo said could still be lost. Because the upgrade was won by a slim margin, he sees a real chance of falling back if the economy keeps underperforming. GDP grew only 2.8 percent in the first quarter of 2026, well short of the government’s 5 to 6 percent target, leaving policymakers little room for error.
“If we are not downgraded by credit rating agencies from now until 2028, and if we don’t revert to lower-middle income – we have just been upgraded to upper-middle income, and it is only by a small margin, so there is the likelihood that we can go back to lower-middle income – if we succeed in keeping ourselves in upper-middle income, that’s a plus, it’s positive,” he said.
Holding on to the country’s credit ratings and keeping risk premiums low, Guinigundo added, will show whether markets still trust the government. He framed the coming two years as the period that will decide what the President leaves behind.
“If all of these metrics and indicators are showing and pointing in the right direction, then the president has succeeded in making full use of his last two minutes. In other words, there’s a legacy that he can leave behind. But that’s something that we need to see in the next two years.”
The weak link, in his view, is not a lack of laws but the failure to carry them out. Foreign investors, he said, look for rules that are both consistent on paper and consistently enforced.
“We may be long in terms of policy – we have a lot of laws – but we are very short in execution,” Guinigundo said.
“If the foreign investors get to see that the government is serious in laying down the roadmap to addressing corruption and promoting good governance in the Philippine government – they will come. They will come.”
He called for foreign direct investment to remain at the center of economic strategy through the end of the administration’s term.
“We need investment, particularly foreign direct investment, to not only jumpstart but to leapfrog the economy,” he said.
Infrastructure should get the same attention, with the government finishing what it has already started instead of launching projects that leak funds or fall short on quality.
“Infrastructure is also very, very important to undertake. In other words, just continue with what has been started and make sure there are no ghost projects, no unfinished projects before his term ends, and no projects made of substandard materials,” Guinigundo said.
Headline growth figures, he argued, say little on their own. The better measure is whether households and small businesses actually feel the gains, and whether underemployment eases as a sign that the jobs being created are decent ones.
“We have to see rising real income of the people. We have to see a declining incidence of poverty. We have to see greater opportunities, even for small businesses, to translate all of these opportunities into more meaningful livelihood for them,” he said.
On wages, Guinigundo pointed out that the nominal minimum wage of about P695 is worth only P533 once its real purchasing power is taken into account.
