Family feud and our tight fiscal space

The only thing worse than a breakup is an ugly breakup, and that’s exactly what has happened with the Marcoses and the Dutertes.

The plot gets thicker every day, and after Vice President Sara Duterte’s tirades in a two-hour press conference last week, it is obvious that UniTeam is now a thing of the past.

Unli chopper rides

So far, Sara’s beef has been about the loss of her entitlements – from confidential funds to her security contingent, all funded by taxpayers’ money. And now, in addition to that, a new issue – access to the 250th Presidential Airlift Wing or the so-called Bluebirds which President Marcos apparently did not fulfill.

Unfortunately or fortunately, we have become unwitting spectators in this latest round of the Philippines’ Game of Thrones: Marcos-Duterte version.

On the one hand, it’s good that UniTeam parted ways because now all these dirty secrets of the previous administration are out in the open, including those who were really involved in perpetrating the bloody drug war.

We’re also seeing how ugly politics is in the Philippines and how entitled our leaders are, throwing tantrums when they lose their entitlements.

But unfortunately, we’re also seeing how political foes attack each other not because of valid economic or political issues but because of broken promises that have affected their personal lives.

In short, it’s personal, and it’s never about the country. It’s never about the Filipino people.

Unfortunately, too, this ugly breakup has taken center stage, capturing our leaders’ attention which should instead be focused on many pressing issues hounding our country today.

Funding gap

One such issue is our tight fiscal space, which is bloating our borrowings.

According to the latest data from the Bureau of the Treasury, revenue collections amounted to P2.993 trillion in the January to August period, equivalent to 17.1 percent of gross domestic product.

Similarly, year-to-date expenditures reached P3.7 trillion, up by 11.32 percent, and already equivalent to 64.13 percent of the P5.8-trillion full-year target.

As a result, the country’s fiscal deficit for the eight-month period reached P697 billion, which is now at 4.9 percent of GDP, up from 4.8 percent for the same period in 2023.

A report by GlobalSource pointed out that because of this, the government should further increase its borrowings from both the local and external capital markets.

Says the GlobalSource report:

“Domestic borrowings funded P1.53 trillion of public spending while external borrowings covered P121 billion, on a net basis – meaning some borrowings were used to service older loans. The rest came from cash drawdown from NG (national government)’s cash reserves.

“Thus, at end-August 2024, NG’s total debt stood at a whopping P15.55 trillion, nearly three times the average annual budget. At such a level, NG debt is around 61 percent of GDP for the first half of 2024. But the debt service payments have also been rising. For the first eight months of 2024, total debt service aggregated P915 billion versus year-ago’s P459 billion, or nearly double.”

Against this backdrop, the government would have to urgently fund next year’s budget of P6.352 trillion.

This is the reason for the Department of Finance’s controversial order for government corporations to remit their “unused” funds.

GlobalSource correctly pointed out that the directive appeared to have missed the failure of some government corporations to fully implement their mandates.

As critics have noted, in the case of PhilHealth, for instance, there would be no unused funds if the state health insurer expanded the health coverage of its members, reduced the members’ contributions or implemented universal health care pursuant to the law.

Thus, there should have been no unused funds in the first place.

As it stands now, the Marcos administration is sticking to its plan not to impose new taxes.

GlobalSource said, “Instead of raising more progressive tax policy on wealth, for instance, the national government opted to depend on better tax collection, which has yielded limited results in the past.”

A budget deficit means the government’s revenues are not enough to fund its expenses. This means less funds for social services such as health and education.

Time of reckoning

Our wide fiscal gap is just one of the pressing issues the Marcos administration needs to address. There are others, such as unemployment, the high cost of food, low consumer spending and many more.

Unfortunately, President Marcos is also dealing with this ongoing and worsening family feud with the Dutertes.

Clearly, his campaign promises of “unity” and P20-per-kilo rice have remained just that.

The time of reckoning will come by yearend if our economic growth fails to reach the target of six to seven percent this year, GlobalSource warned.

The International Monetary Fund has already downgraded the country’s economic growth forecasts for this year and next year from six to seven percent to five to six percent as private sector consumption remains weak.

After VP Sara’s two-hour dizzying press conference last week, both camps are again trading barbs. Administration lawmakers said Rody Duterte’s daughter needs psychological assessment.

Duterte supporters, on the other hand, just throw the usual allegations at Marcos – that he is addicted to illegal drugs, something the President has repeatedly refuted.

But it’s political humorist Professional Heckler who threw the best punch line:

“Yan ang napapala ‘pag bangag ang botante.”

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Email: [email protected]. Follow her on Twitter @eyesgonzales. Column archives at EyesWideOpen on FB.