Senator Ronald "Bato" dela Rosa suggested a straightforward yet unconventional idea: Why not increase the population as a means to alleviate the government's substantial debt burden, which currently amounts to nearly P15 trillion?
During the Senate briefing on the Proposed 2024 National Budget on Tuesday, Aug. 15, de Rosa believes that by spreading the debt among a larger number of individuals, the “per capita debt” would be influenced, potentially offering some relief to each citizen.
“Mas maganda siguro manganak tayo ng maraming anak para lumaki ang population natin, at pag lumaki ang population, mas marami mag hatihati są utang, mas bababa ang per capita utang natin,” dela Rosa said.
[Maybe it would be better if we gave birth to more children so that our population could grow. With a larger population, the debt would be divided among more people, resulting in a lower per capita debt]
“Yung simple ba, yung inobre ba, inobreng pag iisip. Manganak ng mas marami para yung per capita debt natin mas mababa. The bigger the population, mas marami mag hatihati są utang,” he added.
[In simple terms, if we have more people, our per capita debt will be lower. A larger population means that the debt will be divided among more individuals.]
During the discussion, the Senator then raised a question to Finance Secretary Benjamin Diokno regarding the concerns of Filipinos about the skyrocketing national debt.
In response, Diokno reassured that the debt, which amounts to P14.15 trillion as of June, should not be a cause for panic when considering the debt-to-gross domestic product (GDP) ratio.
Debt-to-GDP ratio compares the government’s total debt to the size of the country’s economy or its ability to generate income.
Diokno clarified that the reason behind the mounting national debt is the government's need to borrow funds for infrastructure investments, which are vital for driving economic expansion.
He went on to explain that when the economy experiences robust growth, it ultimately benefits the most vulnerable members of society, particularly the poorest population.
“If you look at the composition of the budget, it’s really pro-poor,” he said.
According to Diokno, individuals should evaluate the budget based on how much they pay in taxes and how much they personally benefit from it.
“If you're poor, you don't pay as much in taxes, but you receive numerous benefits, such as free education, free healthcare, and social protection measures,” Diokno said.
Diokno already explained earlier that he was unfazed by the persistent growth in debt, stating that the absolute numerical value does not provide a holistic understanding of the government’s financial condition.
He explained that the public should look at the debt-to-GDP ratio.
In 2022, the total value of all goods and services produced within the Philippines, known as the GDP, reached P22.271 trillion.
The debt-to-GDP ratio in the second quarter of 2023 was 61 percent, a decrease from 63.5 percent recorded last year. This occurred despite the significant increase in the absolute amount of debt burden.
Monitoring the debt-to-GDP ratio is crucial as a high ratio suggests potential difficulties in repaying debts.
It is generally recommend that countries, like the Philippines, maintain a debt-to-GDP ratio below 60 percent as it is considered manageable and sustainable.
To put the debt-to-GDP ratio in terms of an ordinary person's life, Diokno said let’s think about it in relation to personal finances, imagine comparing someone’s own debt to his annual income.
To illustrate the point, an accumulated debt of P10 million would not be so burdensome for an individual with a yearly income of P25 million. However, it would pose a significant problem for someone earning only a minimum.
Diokno said the best way to reduce the debt-to-GDP ratio is to increase the size of the economy, which serves as the denominator in the ratio.
Under the Medium-Term Fiscal Framework of the Marcos administration, the government has set a goal to reduce the debt-to-GDP ratio to below 60 percent by 2025, and subsequently decrease it further to 51.1 percent by 2028.