Group calls government statements on debt sustainability misleading, deceptive

The Freedom from Debt Coalition (FDC), a broad organization known for its alternative economic analysis and debt monitoring, questioned a recent assertion by the Department of Finance (DoF) that the country’s debt was sustainable and is “relatively lower” compared to its several Asian countries.

The country’s outstanding debt reached Php 16.75 trillion in March, based on the latest data released by the Bureau of the Treasury (BTr).

“This is not an apples-to-apples comparison. We all know that Japan’s and Singapore’s situation is very different from ours. To simply say, for example, that Indonesia’s debt is Php 31.37 trillion ignores the fact that their economy, at around Php 78 trillion, is vastly larger than the Philippines’ Php 26 trillion economy. Thailand, also cited in the DoF statement as having a higher debt level at Php 17.73, also has a higher GDP at over Php 29 trillion. The bigger your economy, the greater your capacity to absorb debt, all things being equal. Therefore, it is misleading to say that our level of borrowing is sustainable simply because it is lower relative to that of our peers,” said Rovik Obanil, FDC’s secretary general.

“These statements appear to be part of an ongoing effort to downplay fears regarding the high borrowing levels under the current administration. With the country’s debt soaring to unprecedented heights, it is becoming increasingly clear that the promised return to pre-pandemic levels of debt, was a mirage.”

“The deception does not end there. In what seems to be a blatant attempt to “move the goalposts”, government has even resorted to changing the acceptable debt-to-GDP ratio from the globally-recognized 60 percent to 70 percent to hide the fact that the debt-to-GDP has not gone down and in fact, reached a two-year high earlier this year,” Obanil added.

FDC asserts that rising sovereign debt could end up hobbling the country’s development for years to come.

“All of this, of course, is happening within the context of our ever-increasing debt dependency. This is very concerning. We cannot simply sweep this problem under the rug because the rising sovereign debt contributes to our recurring budget deficits. It affects the government’s ability to fund important social programs. It will force us to raise more taxes. If left unchecked, it can lead us down the road to a debt crisis, similar to what transpired when Pres. Marcos’ father was at the helm of the government.” Obanil argued.