Attaining a balanced budget and cutting hard the deficit
ENERGY, INFRA AND ECONOMICS - Bienvenido Oplas Jr. - The Philippine Star
September 18, 2025 | 12:00am
DUBAI – The United Arab Emirates suffered a five percent GDP contraction in 2020 during the global lockdowns, their public debt rose from 26.8 percent of GDP in 2019 to 41.3 percent in 2020, then slowly reduced it to 32.1 percent in 2024. That is a good achievement.
I am here waiting for my connecting flight to Madrid, Spain, then train to Valencia, the venue of my conference. Spain suffered a double-digit 10.9 percent GDP contraction in 2020. Their public debt rose from 97.6 percent of GDP in 2019 to 119.2 percent in 2020, then slowly reduced it to 101.8 percent in 2024.
Philippine public debt rose from 37 percent of GDP in 2019 to 51.6 percent in 2020, rose to 57 percent in 2021 and remained at that level in 2024 (Data from IMF World Economic Outlook 2025).
Reducing our public debt seems to have become a slippery goal. So fiscal and monetary economics stories like these in The Philippine STAR yesterday, Sept.17, are good news to me: “GOCC dividends hit P117 billion in September”, ‘One more rate cut possible this year’, and “Government expects P100 billion boost from bond market inclusion.”
Government derives revenues not only from taxes, regulatory fees and fines, and asset privatization, also from dividends of government-owned and controlled corporations (GOCCs) and finance institutions. Data from the Bureau of the Treasury show that GOCC dividends remitted were P69.1 billion in 2022, P102.2 billion in 2023, P138.5 billion in 2024 and P106.3 billion as of July 2025.
In a press statement by the Department of Finance (DOF) last Sept. 16, “Recto to GOCCs: You are people-owned, Filipinos must be at the heart of services anchored on good governance,” Secretary Ralph Recto recognized the 53 GOCCs for their dividend contributions of P109 billion as of Sept. 12. The DOF also expects the year-end dividend remittances to reach at least P117 billion, even up to P157 billion.
This is good news. Especially to the “rock star” of GOCCs, Land Bank of the Philippines that remitted P32 billion last year and P33.5 billion this year under the leadership of LBP president Lynette Ortiz.
Our budget deficit has been at the P1.5 trillion to P1.6 trillion a year from 2020-2024, and projected to stay at that level until 2028. With or without any economic or virus crisis our public spending and subsidies never decline relative to increases in revenues.
There is a need to deliberately cut certain spending, government should aspire to have a balanced budget, even a fiscal surplus to reduce the public debt stock – P17.6 trillion as of July 2025 when it was only P8.2 trillion in 2019 and P6.1 trillion in 2012.
When Department of Budget and Management Secretary Amenah Pangandaman reported that the various agencies have submitted a total of P10.1 trillion last April for the 2026 budget, my hypothesis that national government agencies are increasingly getting more fiscally irresponsible is further confirmed. Why, because the budget in 2025 is only P6.3 trillion and agencies submitted nearly P4 trillion increase in just one year.
It is good that Secretary Pangandaman, along with Secretaries Recto and Balisacan have disallowed many huge spending requests by various agencies.
The interest payment for our public debt is getting worse. The principal amortization plus interest payment are as follows: P1.257.3 trillion and P763.3 billion in 2024; P1.206 trillion and P848 billion in 2025; and P1.055.6 trillion and P950 billion in 2026. Interest payment keeps rising even if principal amortization is falling.
Below are general guidelines where spending cut by the national government can be done, my unsolicited proposals.
One, cut social programs and subsidies where local governments have high and rising spending already. From the Budget of Expenditures and Sources of Financing (BESF) 2026 by the DBM, allocations to LGUs are P1 trillion in 2024, P1.19 trillion in 2025 and P1.35 trillion in 2026. Then they have local revenue sources aside from these transfers from the national government.
These include cutting the budget of DepEd, state universities and colleges (SUCs), DSWD freebies, DOH freebies. For instance, there are 121 local government universities on top of 113 SUCs. What most if not all SUCs do, they expand the number of campuses per province.
Two, cut if not discontinue certain subsidies for Metro Manila. Like the 50 percent discount for seniors, students and PWDs in LRT, MRT. Then the “zero balance billing” in DOH hospitals as most DOH hospitals are in Metro Manila. Such subsidies are additional attraction to people in the provinces to further flock to the big city as there are many government freebies there that are not available in most provinces and cities.
Three, infrastructure programs where public-private partnership (PPP) programs and funding can be optimized. These include Luzon-long highways with the expansion of TPLEX up to Ilocos Norte, expansion of SLEX down to Sorsogon. Private corporations like SMC can do help in river dredging and flood control at no cost to government. SMC needs more filling materials for the Bulacan Airport project.
Four, reforms in military and uniformed personnel (MUP) pension, civilian pension. Also in the BESF, pension and gratuity fund are P144.7 billion in 2025 and P198.0 billion in 2026. Government personnel, uniformed or not, should contribute for their own retirement fund someday via monthly salary pension deduction. This should not be added to the annual budget that contribute to the bloating of the deficit.
Five, back to more personal and parental responsibility and less government responsibility in running people’s daily lives. Cultural corruption can happen when many parents think that their children’s education, healthcare and nutrition, cash allowances are largely government responsibility and not theirs.
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