Name: Nuñez, Angela C.

Year and Section: BSA - 3C 

The Debt Crisis of the Philippines

The Philippines Debt and Poverty was written by Rosalinda Pineda-Ofreneo. The

Philippines is rich in natural resources but, it ranks 6 in the World Bank Debt Table. The public
th

pays the bill for the outflow in the form of higher taxes imposed by the government to raise more

funds for debt payment. Filipinos are the one who is suffering from the debts of our nation, even

the unborn are already indebted. However, the poor have more burdens as they pay more taxes

and basic goods than rich people. They work harder and longer but earn less real income because

of currency depreciation and inflation caused by policies imposed by the country's creditors.

Perhaps the most damaging aspect of the financial issue is the continued export of Filipinos to

help pay off the debt, despite the loneliness, uncertainty, and humiliation they usually suffer. Our

country's debts have robbed us of the possibility to live in wealth.

Moreover, we are also suffering from our environment. To generate money, widespread

exportation and smuggling of logs and other forest products are flourishing. Our enormous debts

started in the colonies of Spain and the United States four hundred years ago. This is where the

Filipino First policy was adopted and which heavily favors Filipino businessmen over foreign

investors with respect to the grant of rights, privileges, and concessions covering the national

economy and patrimony. It did not last long because, in 1961, with the presidency of the

Macapagal administration, foreign interests succeeded which ended the Filipino First Policy. The

Philippines fell into the 'debt trap,' a cycle of permanent dependence on global financial
institutions, namely the International Monetary Fund, due to the depletion of foreign-exchange

reserves. 

It continued in the reign of President Ferdinand Marcos with the Investment Incentive

act. During the martial-law years, foreign dominance of the Philippine economy grew

significantly (1972-1986). Risen to $5.3 billion and $26.3 billion by February 1986 when the

Marcos regime collapsed and Corazon Aquino's administration took over, This increased debt

burden was caused by two sources. The one who benefits from the debt are the Creditors 

because interest payments are made. They are able to influence the government to enact policies

that are favorable to them. Moreover, it does not also benefit our fellow filipinos. Negotiators

and staff benefited from payments to make 'feasibility studies' and to go on expensive trips

abroad. The bureaucracies and officials profited as well, accusing them of building 'five-star staff

houses, rest houses, and sports complexes all throughout the country, purchase helicopters and

private plane charters; and increase pay to astronomical levels.

The poor were really affected by debt service because there is an enormous amount of

money that the government must set aside for debt payment and very little left over to satisfy the

needs of the poor. As compared to the Department of Education, Culture and Sports received

only P24.675 billion and the Department of Health only P7.024 billion, the P97.712 was spent on

debt service. 43.9 percent was allocated to the poor and 38.7 percent for economic and social

services. The government takes 8,000 per family in response to debt-related problems but each

family only receives benefits from them in about P880 per capita or P5,280. As they have low

income and can’t afford high services, they rely on public schools and government assistance. 
 The main point of this text is to discuss the debt of the Philippines in which it causes

significant impact until this day. After reading the text, I learned a lot of information about the

situation of the Philippines including how and where our debt began. That information made me

realize that everything I thought I knew about Marcos' reign was incorrect. At first, I thought our

country was wealthy at the time, but after reading this, I realized he was the primary cause of our

debt. I just know that he has done good things in the past, and I don't know much about his

negative sides. As a student, I’m really disappointed because I used to think highly of him

before. It did change my perspective about him. I’m also disappointed in the one who taught me

about our former president because they only told us about the positive aspects of his character.

Even Though we are still students, we are already paying the taxes. As long as we live, we will

pay for the debt of the rulers if nothing changes.

As a practitioner, I am dissatisfied with our system. Many have led but our country is still

not recovering. We have a huge deduction from our pay, although we make very little money. It

is okay to deduct a large amount of money if the income is high. However, because the revenue

is already low, there is little left over, and it is insufficient to meet the needs. Even if you

graduate and have a profession, the salary is low compared to other countries. That’s why I don’t

blame our co-filipinos if they chose to work outside because there’s a lot of opportunity there. I

hope they improve wages for all workers, not just government employees.

As the breadwinner of our family, this is a difficult situation since I feel you will have to

bear everything. Of course, I was disappointed by what I discovered, since I already feel that

each family receives little or no assistance. I believe that repaying others' debts is tough. But you

don’t have a choice because you can’t cut ties with it. Our situation is just similar to what the

Philippines experienced. Not long ago, since my parents were already separated, only one could
take care of us. My mother already had a family, so she abandoned us to our father. However,

she left us with a large debt. She immediately fled because she can’t pay and take responsibilities

with it. We are still struggling because we are being charged for her debt. Mama already owes

money to others, as well as the bank. She renovated her house with the money she owed the bank

and paid other debts with the surplus money. But I saw that what she did was wrong, because if

she didn't have money, she shouldn't push to renovate her house. As she  borrowed from the

bank, her debt grew because of the interest. We are the ones who are suffering, and we will be

responsible about how we will pay off the debt.

As a concerned citizen of the Philippines, I want our country's debt to disappear but I

want those leaders who caused our debt to be more accountable because they are the real reason

we are bound by debt. If our debt is fully paid off, we will be able to develop our country better.

More attention will be given to the needs, especially the poor. I am really disappointed because

the debt of the Philippines is getting bigger and bigger even though a lot of taxes are being

deducted from everyone. We cannot use our wealth because there is something wrong with our

leaders. As a result, rather than prospering, we continue to sink deeper into debt. As of March

2022, the general government debt of the Philippines amounts to ₱12.03 trillion

($232,255,149,900). What I actually knew at the time was that the Philippines is wealthy.  If we

have a lot of deductions yet our debt isn't getting smaller. There is definitely corruption in the

system.

Debt servicing equates to nearly 40 percent of the P4. 5-trillion budget for 2021.

According to Finance Secretary Carlos Dominguez III,  the proportion of debt service to GDP for

this year stands at 6.3 percent and is projected to go down to 5.9 percent by 2022. On the other

hand, it is expected to rise to 6.6 percent by 2023 and jump to seven percent by 2024. In my
opinion, I agree and highly recommend what Domingo said because we are still in the midst of a

pandemic. They can’t collect much taxes because of lower revenue. The percentage of the debt

service for me is equivalent to 34.1 percent. We will increase the allocated percentage of debt

service after we recover from the pandemic.

As I mentioned, the Possible deferment of debt servicing is because of lower revenue of

individuals. Subsequently, a lot of businesses were closed in the pandemic, so they can’t collect

money to meet the target budget. Moreover, there’s inflation to the goods and service, the

changing of prices affects income of everyone and the businesses. This means that the

purchasing power decreases. Our government prioritizes healthcare and vaccines to reduce

infected people and for us to be free in Covid. As a result, we won't be able to simply pay off our

debts.

According to Finance Secretary Carlos Dominguez III, “Lower revenue collections and

higher public health bill translate to budget deficits. To cover the budget gap, we had to borrow

more. It is a necessity. “ The sources of additional revenues for the government is to borrow

money from countries like Japan and Korea. This is where we are able to cope up with the deficit

budget. Moreover, they are taxing notorious Youtubers because they are still part of the taxable

individual. They cannot escape because it has been in the law for a long time. Self-employed

influencers whose gross sales do not exceed the value-added tax threshold of P3 million will pay

8% tax on gross sales. If earnings are over P3 million, influencers’ books of accounts must be

audited and examined yearly by a certified public accountant. Other than the primary sources of

revenue of the government such as taxes on income and profits, taxes on property, taxes on

domestic goods and services, taxes on international trade and transactions, we have other
sources. This includes collections from the motor vehicles tax, immigration tax and forest

charges. 

We can use Fiscal policy for Cost saving measures and strategies resulting in lesser

government expenditures. Fiscal policy is the process through which a government modifies its

expenditure and tax rates in order to monitor and influence the economy of a country. When

inflation becomes very strong, the economy may need to slow down. In this case, a government

can utilize fiscal policy to raise taxes in order to suck money from the economy. It can be used to

dictate a reduction in government spending and thereby lessening the amount of money in

circulation.

In conclusion, we must study the debt of the Philippines. Not just the causes and how

they collect funds, we must learn how our government can solve this problem. Where do they get

funds to lessen our foreign debts, how do they budget to pay off debt and what are the Cost

saving measures and strategies resulting in lesser government expenditures. This text also tells us

that we must open our minds to the truth and not remain blind. If the wrong persists, our debt

will continue to grow because the rotten system will remain. I recommend this work because the

accuracy is high in which the author gave accurate information about the topic. The Organization

and the completeness is also high, as she discussed the process. I learned a lot of information that

changed my perspective. As a result, my knowledge grew, and it  became a way to enhance my

political beliefs.