The Philippines touts a 5.6 percent gross domestic product (GDP) growth in 2024, the highest in the region. With the highest GDP growth rate and one of the two biggest national budgets in ASEAN (2021-2025), it has little to show—except the lowest GDP per capita in the region.

Besides, our 1.9 percent inflation rate and 1 percent population growth rate somewhat dampened the effective GDP growth rate.

In the meantime, the OCTA Research Group nationwide survey (April 2-5) showed President Ferdinand Marcos' trust rating dropped from 65 percent in November 2024 to 60 percent in April 2025, and his satisfaction rating from 64 percent in November 2024 to 59 percent in April 2025.

Meanwhile, with the mid-term elections just days away, the administration's image-building must be revved up. It seems to be in near panic mode.

While everyone seemed distracted, Secretary Ralph Recto's Finance Department attempted to insert new tax measures—increasing the tax imposed on capital gains, donors, and estate taxes from 6 percent to 10 percent, raising a collective howl from small-medium businesses and the middle class.

Secretary Recto blinked, tail between his legs, and aborted the new burdensome measures, citing that the government was fiscally in shape due to higher-than-expected earnings in First Quarter (January-March) tax revenues. Some suspect a bit of mental dishonesty there, as we are already entering May, and these first-quarter numbers were available much earlier.

Besides, the government already forecasted in the national budget that the total revenues for 2025 will be ₱1.538 trillion, up by ₱53 billion from 2024's ₱1.484 trillion. Was the Finance Department still surprised?

The 2025 National Budget, on the other hand, has been soundly criticized for its unethical realignments and regressive cuts. This lack of accountability for budgetary expenditures in the past makes any new proposed tax increase today look short of criminal, indeed.

Despite this perennial increase of national spending being higher than growth in revenues, the government still insists on deficit spending, marking the deficit at ₱1.538 trillion in 2025, higher than the ₱1.484 trillion deficit in 2024. Despite policymakers' vow in 2024 to "live within our means," total debt for the Philippines will rise to ₱17 trillion by the end of 2025 from ₱16.3 trillion in 2024. Aside from the proposed taxes?

Our total debt is almost breaching the 60 percent international prudential ratio of debt/GDP, and even exceeded that in one quarter in 2024. With debt at ₱17 trillion and the denominator of the debt/GDP ratio not expected to hit the 6 percent government target for 2025, the danger of exceeding that ratio is imminent. The World Bank had already downgraded its January GDP growth projection for the Philippines from 6 percent to 5.5 percent in April, as did the IMF, from 6 percent to 5.3 percent for the same period.

Breaching that ratio can mean two things for the Philippines: creditors/investors will not be as enthused to make that capital available for us, or if made available at a higher interest rate, increasing our cost of capital. What's with this fiscal recklessness? Or is it courting a debt trap?

Perhaps running out of mileage in the propaganda war, the government rushed to make available "cheap" rice at ₱20 starting in Cebu and planned to do it nationwide before the elections. But the constitutional body of the Comelec blocked its distribution and moved it after the polls, consistent with Comelec rules. Department of Agriculture's Secretary Francisco Tiu Laurel had to follow. Besides, the ₱50 billion worth of ₱20/kilo rice is a minuscule part of the total rice consumed by the country, which is the world's largest importer of rice. It was pure "acoustics."

One must also consider the economics of the ₱20/kilo rice subsidy. Given the Philippines' expensive cost of production, they cannot sell retail at ₱20/kilo without incurring a government subsidy.

According to sources, the current breakeven selling price of the NFA to LGUs is ₱45 per kilo, and when sold at the usual ₱33/kilo, the NFA gets a subsidy of ₱12/kilo from the government. Secretary Laurel himself admits that if the government sold all its current NFA stocks at the subsidized price of P20 per kilo, the government would incur losses of ₱10-₱12 billion.

When done several times during the year, the cost is astronomical. The subsidy reportedly comes from the contingency fund of the President. But every peso of rice subsidy means one peso less for future contingency purposes like calamities, drought, El Niño, floods, and volcanic eruptions. It is a zero-sum game. No free lunch, mister.

Finally, the government's "sweet promises" of labor wage adjustments remained such when, on Labor Day, the President declared that the request for a ₱200 across-the-board wage hike demanded by Labor will be studied separately by each Regional Tripartite Labor and Productivity Group. No movement. Any more pro-poor election propaganda?

Therefore, the government must go beyond the ordinary in the "last two minutes of the ballgame" as the midterm polls on May 12 hang ominously close. But there is no more room for further financial Houdini acts.

(Bingo Dejaresco, a former banker, is a financial consultant, media practitioner, and author. He is a Life and Media member of Finex. His views here, however, are personal and do not necessarily reflect those of Finex. [email protected])