Interest never sleeps

The 2026 National Expenditure Program prepared by the Department of Budget and Management (DBM) and submitted to Congress is set at a record P6.793 trillion. While high expenditures are expected for a growing country like the Philippines, the increasing debt level is concerning, as the government is projected to spend P950 billion on interest payments, with another P1 trillion allocated for principal amortization. Movements in interest rates are significant as interest payments are a function of rates and the principal borrowed.

Between 1986 and 2010, approximately 30% of the national budget was allocated to interest payments, which restricted productive spending on sectors such as social services and infrastructure. These are still areas where the Philippines is falling behind, showing the cumulative effect of underspending in those sectors. This share reached 36.9% in 2004 when the growing budget deficit, rising public debt, and macroeconomic factors led President Gloria Macapagal-Arroyo to declare that the Philippines was in the midst of a fiscal crisis, warning of a potential debt default. The situation has improved, and the Philippines is now in a significantly better fiscal position, but it is our responsibility to sustain this improvement.

Borrowing to finance projects that will bring long-term value to the country is not necessarily a bad thing; however, in the words of J. Reuben Clark, “Interest never sleeps nor sickens nor dies; it works on Sundays and holidays.” The investments the country makes must generate enough return to pay off the debt we incur to finance them. We borrow today with the understanding that future generations will repay it, and each extra peso we pay in interest is one less peso available for priority projects. Whether the projects succeed or not, we still have to pay the principal and interest.

This situation is further aggravated by corruption, which siphons off vital national resources. The World Bank estimates that this amount was roughly 20% of the National Expenditure Program in 2024. These stolen funds translate into debts that future generations will shoulder, not only through monetary payments, but also through the long-term impacts of reduced investments in social services, such as education and healthcare, as well as infrastructure development. Today, we see this playing out in the Philippines’ educational crisis. At the same time, we continue to deal with recurrent flooding and inadequate road networks, all of which hinder progress and deepen inequality.

Imagine the impact if, instead of funding lavish lifestyles for corrupt officials and their associates, those funds were redirected toward genuine national development. Public funds must be used effectively and efficiently, with transparent processes and strict accountability to ensure the projects benefit the broader population. When investments focus on critical sectors like education, healthcare, infrastructure, and social welfare, the country can experience sustainable growth, improved living standards, and greater opportunities for all Filipinos.

As our national debt continues to grow, it becomes even more critical for the government to exercise exceptional care and transparency in how it allocates, disburses, and utilizes public funds. Our national debt has grown tremendously from approximately P6 trillion in June 2016 to more than P17 trillion as of June 2025. Responsible borrowing and prudent fiscal management are essential to prevent debt from perpetuating a cycle of dependency and corruption.

Private citizens can play a crucial role in ensuring accountability by actively participating in the democratic process and engaging in civic discussions to influence policies and shape the actions of leaders. Citizens can also hold public officials and institutions responsible through advocacy, watchdog activities, and demanding transparency in government dealings. Additionally, private individuals lead by example by following laws and regulations, supporting community growth, and promoting ethical conduct. Ultimately, engaged and responsible citizens are the backbone of a strong nation because, after all, it is our tax money funding it. Let us fund a better tomorrow for all.

The views expressed herein are his own and do not necessarily reflect the opinion of his office as well as FINEX.

EJ Qua Hiansen is the chief financial officer of PHINMA Corp. and the president of the Financial Executives Institute of the Philippines.