Corporate Watch

The tradition was started in the Philippines in the Commonwealth era and transitioned from the moratorium of the World Wars to the granting of Philippine independence by the United States of America on July 4, 1948 as the New Year’s official courtesy call on the president by the military with high government officials and the invited diplomatic corps. After the EDSA Revolution, the traditional New Year’s reception was continued, but came to be known as a vin d’honneur, according to the Official Gazette (, Jan. 12, 2012).

This year, a few days before President Ferdinand Marcos, Jr. marks his first year in office, the vin d’honneur was celebrated for the second time within the year after the 2023 New Year’s Day observance. The grand event was for Independence Day this time — an occasion to raise toasts for good health, prosperity, and harmony with top local officials and foreign dignitaries in the country.

“Today’s celebration has taken a whole new different meaning, as we mark this occasion with renewed hopes and spirited resolve to rise anew as a nation, not from political oppression but from economic scarring engendered by the crippling and lingering effect of the pandemic… That is why, as a way to honor our forebears, it is my duty as President to keep this house in order and steer the country to a high-growth path whose effect will be felt by each and every ordinary Juan de la Cruz,” Marcos Jr. said (GMA News, June 12).

But a danse macabre hovers in the shadows of the luminous vin d’honneur. Juan de la Cruz is scared. The “economic scarring” that was attributed to “the crippling and lingering effect of the pandemic” feels like a deep wound that would not heal for generations to come. Fifty one percent (51%) of Filipino families considered themselves poor, 30% rated themselves as “borderline” (placing themselves on a line between poor and not poor), and 19% categorized themselves not poor, according to a recent survey by the Social Weather Stations (SWS), conducted from March 26 to 29 (CNN Philippines, May 8). Will there be the promised inclusion of “each and every ordinary Juan de la Cruz” in the “high growth path” to economic recovery?

Dr. Mahar Mangahas, president of SWS and former professor of economics at the University of the Philippines Diliman, laments that “the official reading of poverty comes along only once every three years. For the two years in between its reference years, the government is officially blind to the state of poverty. As of now, March 2023, the government’s latest official poverty rate is 13.2% of families. Its criterion is a threshold income of P12,030 per month, for a family of five, in 2021” (, March 4). Dr. Mangahas cautions that many times, the government has tampered with poverty statistics, like “in 2011 when it radically reduced the poverty line, applied it to the 2009 conditions, and back adjusted its earlier poverty rates up to 1991” (Ibid.).

“To rise as a nation,” as President Marcos Jr. eloquently boomed at the select audience of the vin d’honneur, he must truthfully come with his “duty as President to keep this house in order, and steer the country to a high-growth path…” — a solemn oath to all Filipino people to make life better and more stable into the future. “The 2022-2028 Medium-Term Fiscal Framework (MTFF) aims at consolidating the resources of the National Government to be better used. This is expected to usher in a high-growth path that is sustainable through 2028 as it ensures consistency of budget programs with the MTFF… It would certainly bring in a lot of public goods if the top five priorities are pursued and attained: education, public works and infrastructure, health, social welfare, and agriculture,” former Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa Guinigundo writes about a Development Budget Coordination Committee (DBCC) announcement.

“But the same DBCC added that for 2023, the National Government (NG) is looking at a fiscal deficit of P1.471 trillion or a huge 6.1% of GDP as a result of the large excess of public spending, programmed at P5.177 trillion, over public revenues, expected at P3.707 trillion.” Mr. Guinigundo worries and warns about the “Mountain of Debt” that the government is incurring to feed the high-growth path dreamed about by the economic managers (, Jan.  12).

The National Government’s total outstanding debt swelled to P13.86 trillion by the end of March, the Bureau of the Treasury said. It rose by P104.15 billion or 0.8% from the previous month primarily due to the net issuance of domestic (68%) and external debt (31.3%), the agency added (CNN Philippines, May 8). The budget deficit climbed to P210.3 billion in March, which was 12% higher compared to the same month last year. The higher fiscal gap was due to an 11.9% decrease in government receipts even as spending also fell 2.6%, Treasury said (ABS-CBN News, May 2). As of end-March, debt-to-GDP was 61%, according to the BSP. An analyst ventured to forecast the national debt of the Philippines to continuously increase between 2023 and 2028 by a total $105.1 billion (+41.72%). The national debt is estimated to amount to $357.06 billion in 2028 (, April 14).

Mr. Guinigundo cautions against this propensity to borrow, considering it a risk to possible policy reversal (of the MTFF) that “would compromise the previous improvement of Philippine debt.” A good example of policy reversal is the proposed Maharlika Investment Fund (MIF) because it would effectively deprive the National Government of some of its precious revenue sources that include dividends from the BSP, the LANDBANK, the Development Bank of the Philippines (DBP) and other government-owned and -controlled corporations (bworld.opinion, op.cit.).

“Between 2016 and 2021, total dividends of corporate public agencies averaged P69 billion. If we add the BSP’s average remittances of nearly P14 billion during the same period, we are looking at over P80-billion foregone revenues that would have to be covered by higher borrowings. In six years, they sum up to around P480 billion. At an exchange rate of P55 to a dollar, that means the NG will have to sell bonds worth more than $8.7 billion. Authors of the bill should be able to demonstrate that the fund, under a global recessionary condition, could generate a return to investment higher than, for instance, the all-in cost of the latest bond sale of the Republic” (Ibid.) And that means more borrowing. More debt servicing. And maturity repayments.

The other risks come from macro-fiscal shocks, according to Mr. Guinigundo: The peso-dollar rate which continues to deteriorate; inflation remains high at 6%+, way above the insisted 2-4% inflation targets; Ukraine and Russia are still fighting; China and the US are engaged in a low-intensity conflict. Pensions of military and uniformed personnel, paid directly from the annual national budget, building up to P9.6-trillion unfunded reserve deficit, will explode at some point, Mr. Gunigundo says. He also cites alleged net losses of PhilHealth being investigated, amounting to as much as P154 billion which could ease the debt tensions (Ibid.).

But the MIF has passed the Senate and Congress, and is up for the signature of President Marcos Jr. Its funding will come from government financial institutions: the Land Bank of the Philippines and the DBP will give P50 billion and P25 billion each. The National Government is contributing P50 billion, composed of the BSP’s dividends. For the first two years of the fund’s existence, the central bank will need to remit all its declared dividends to the fund.

And the danse macabre, the dance of debt floats wantonly into the fears of Juan de la Cruz. The recent vin d’honneur can only recall the grand balls of Ferdinand Sr. and Imelda Marcos in their time, who, wearing the satin sashes of royalty, thought of changing the name of the Philippines to “Maharlika” (Manny Mogato, “Marcos and the Maharlika Class,”, Oct. 10, 2022).


Amelia H. C. Ylagan is a doctor of Business Administration from the University of the Philippines.