When Rodrigo Duterte assumed the presidency, the Philippines’ national debt stood at 6.6 trillion Philippine pesos, an accumulation of borrowings from previous administrations, including those of Gloria Arroyo, Benigno Aquino III, Joseph Estrada, and Fidel Ramos. However, by the time Duterte ended his six-year tenure, the national debt had surged to over 13.8 trillion pesos—more than double the previous figure. This massive increase in borrowing has sparked controversy, with many attributing the nation’s current financial struggles to Duterte’s economic policies. Officials from the current administration of President Bongbong Marcos have even cited his policies as the primary reason behind the country’s debt crisis.
The Weight of Duterte’s Borrowings
Presidential Adviser on Poverty Alleviation, Larry Gadon, remarked that President Marcos Jr. is grappling with the consequences of Duterte’s aggressive borrowing. He pointed out that in the 89 years spanning 14 presidencies—from Manuel L. Quezon to Benigno Aquino III—the Philippines accumulated only 6.6 trillion pesos in debt. Yet, under Duterte, the government borrowed an additional 7.2 trillion pesos in just six years.
This raises critical questions: Did Duterte’s tenure plunge the Philippine economy into unsustainable debt? Will Filipinos be burdened with repaying this debt in the future? Given that national debt must be serviced through taxation, is this level of borrowing inherently bad? To answer these questions, we must first explore how Duterte’s administration managed public finances.
The ‘Build, Build, Build’ Program and Infrastructure Push
Duterte’s presidency was characterized by a significant push for infrastructure development under the “Build, Build, Build” program. Infrastructure projects require substantial investment, often necessitating borrowing. Since government revenue—primarily sourced from taxes—is insufficient to cover large-scale infrastructure costs, deficit spending became a key component of Duterte’s economic strategy. A fiscal deficit occurs when government spending exceeds revenue. Under Gloria Arroyo, the fiscal deficit hovered around -3% of GDP. Benigno Aquino III managed to reduce this to -0.8% by 2015, allowing the Philippines to lower its debt-to-GDP ratio from 74.4% in 2004 to 45.4% in 2014.
When Duterte took office, it was anticipated that he would maintain a deficit of around -2% of GDP. However, from 2018 to 2019, the deficit climbed to 3.2%. In 2019 alone—before the COVID-19 pandemic—the Duterte administration borrowed over 1.1 trillion pesos, with 906 billion pesos coming from domestic borrowings and 282 billion pesos from foreign sources. Interestingly, despite increased borrowing, the debt-to-GDP ratio remained stable, even decreasing to 34.1% in 2019.
The COVID-19 Pandemic: Catalyst for Rising Debt
The sharp rise in national debt was largely driven by the COVID-19 pandemic. Had the pandemic not occurred, the Philippines’ debt-to-GDP ratio was projected to decline to 39% by 2022. However, the pandemic caused an economic downturn that forced the government to borrow heavily, pushing the debt-to-GDP ratio from 39.6% in 2019 to 54.5% in 2020.
While some argue that the pandemic alone caused the surge in debt, others believe mismanagement played a significant role. Critics argue that Duterte’s administration failed to allocate funds efficiently, leading to unnecessary debt accumulation. Presidential Adviser Larry Gadon pointed to alleged anomalies in the pandemic response, particularly in the procurement of medical supplies.
Corruption Allegations and Mismanagement of COVID-19 Funds
In 2021, a Senate probe investigated irregularities in COVID-19 fund expenditures. The Commission on Audit (COA) flagged multiple deficiencies in how the Department of Health (DOH) managed 67.3 billion pesos allocated for pandemic response. Reports revealed that the DOH failed to properly utilize these funds, resulting in delayed hazard duty pay for healthcare workers and inefficiencies in pandemic control measures.
A major scandal erupted when it was discovered that the Procurement Service of the Department of Budget and Management (PS-DBM) awarded an 8.68-billion peso contract to Pharmally Pharmaceutical Corporation, a small company with a paid-up capital of only 625,000 pesos. Allegations surfaced that the government overpaid for medical supplies, leading to suspicions of corruption. Senate investigations suggested that billions could have been saved through competitive bidding.
Duterte’s defense of Pharmally further fueled criticism. When a senator exposed irregularities in the procurement process, Duterte lashed out, dismissing the allegations. Additionally, he controversially urged the COA to stop publishing audit reports, claiming they unfairly tarnished government agencies. Critics condemned this as an attempt to cover up corruption, arguing that it undermined constitutional safeguards against financial mismanagement.
The Marcos Administration’s Response to the Debt Burden
Today, the Marcos administration faces the challenge of managing this substantial debt. In 2024, the Philippines’ debt burden stands at over 670 billion pesos, with this amount allocated solely for interest payments. These funds could have been used for infrastructure, healthcare, and education but are instead being used to service past debts.
Despite this, the government has a plan to stabilize the country’s debt. Rather than reducing borrowings outright, Marcos aims to grow the economy at a pace that outstrips the increase in debt. By 2028, the debt-to-GDP ratio is projected to decline to 50% through sustained economic expansion.
Why the Philippines’ Debt Situation Isn’t Dire
While high debt levels raise concerns, there are reasons to believe that the Philippines’ situation is manageable. A significant portion of the country’s debt is domestic, meaning that in the event of a financial crisis, the government could theoretically print money to service its obligations without defaulting. This is in contrast to economies heavily reliant on foreign debt, which face greater risks of default and currency devaluation.
Conclusion: The Legacy of Duterte’s Debt
Rodrigo Duterte’s administration significantly increased the Philippines’ debt, a move justified by infrastructure development and pandemic response. However, mismanagement, corruption scandals, and questionable spending decisions have tainted his fiscal legacy. While the Marcos administration works to stabilize the debt, the long-term impact of Duterte’s borrowing spree remains uncertain.
Whether this debt ultimately helps or hinders the nation will depend on how effectively future administrations manage economic growth, investment, and fiscal discipline. The challenge ahead is ensuring that borrowed funds translate into productive investments rather than financial burdens for future generations.