The Department of Budget and Management (DBM) said the Marcos administration is making progress in reducing its reliance on borrowing to support spending, a positive development in its efforts to lessen the country's debt burden.

Budget Secretary Amenah F. Pangandaman said the national government's budget deficit as a percentage of the gross domestic product (GDP) has been consistently decreasing from its peak of seven percent during the height of the coronavirus pandemic.

“We’re making steady progress, aiming to bring it down to three percent by 2028,” Pangandaman said in a statement. “Reducing the deficit translates to less borrowing.”

A budget deficit occurs when the government spends more money than it takes in through taxes and other sources of revenue. This shortfall is financed through borrowing.

However, Pangandaman clarified that borrowing money is still essential for the government as long as it is used for productive purposes.

As of October 2023, the national government’s debt stock stood at P14.48 trillion, higher by six percent compared to P13.641 trillion in the same period a year earlier.

On the other hand, the debt-to-GDP ratio of the government dropped to 60.2 percent at end-September this year from 63.6 percent in the previous year.

The debt-to-GDP ratio is considered more important economic indicator than the nominal value of the government's debt as it provides a clearer understanding of the country's financial standing and its capacity to manage its debt. 

The debt ratio offers insight into how much the government owes relative to the country’s overall income, or economic output, allowing for a more accurate assessment of its financial health.

Despite the improvement, the government's latest debt-to-GDP ratio still exceeded the 60-percent threshold considered manageable for countries like the Philippines.

President Marcos said last week that his administration is committed to creating a legacy free from heavy debt for future generations.

“Debt is not the kind of inheritance we want for those who will come after us. Good fiscal stewardship imposes upon us discipline not to be led into the temptation of bloating what we owe,” the president said.

In response, Pangandaman said the DBM stands united with the president in upholding the taxpayers who enable the national budget. 

In addressing concerns about fiscal responsibility, the budget chief said the 2024 national budget will maintain a focus on prudent debt management while aiding the country's recovery from the pandemic, guided by the Medium-Term Fiscal Framework (MTFF).

In a further display of the administration's dedication to long-term fiscal stability, Pangandaman also confirmed a projected reduction in the deficit from 6.1 percent in 2023 to a goal of slightly above five percent in 2024.

“Rest assured that the DBM shall continue to ensure transparent utilization, release, and monitoring of our public funds,” Pangandaman said.

“We remain committed to delivering on our mandate to promote sound, efficient, and effective management and utilization of government resources to achieve our country’s development goals,” she concluded.