Scrutinize

Scrutinize. Scrutinize. Scrutinize.

The Marcos administration is proposing a staggering P7.2-trillion national budget for 2027. The proposal is introduced through National Budget Memorandum No. 158. A more detailed national expenditure plan is expected to be submitted by the executive branch after Congress reopens late July.

This will be the largest budget proposed in our political history. It is six percent more than the P6.793-trillion 2026 national budget.

The proposed budget will be the equivalent of 21.7 percent of GDP – significantly more than the average. Should our GDP grow at a slower rate than projected, government spending will constitute an even larger share.

Our economic expansion slowed quite dramatically in the first quarter of this year, falling to a miserable 2.8 percent. A slower growth rate translates into slower revenue growth. A critical question may be raised about how government intends to fund this expenditure plan.

The country has been borrowing heavily the past three years. A lot of the borrowed money was lost to massive corruption or flushed down subsidy programs that bought public approval but did not make our economy more proficient.

Our economy has been kept afloat by borrowed money. This might not be sustainable. We are close to our borrowing ceilings. When we hit the predictable limits, we move towards a debt crisis.

In the bad old days, we borrowed from multilateral financial institutions and large banks. This allowed for external monitoring of our fiscal management. Red flags were raised when we overstepped. Painful restructuring was prescribed when needed – no matter how unpopular this was.

After our economy achieved some respectable level of fiscal management, we have been able to meet our financing needs by independently floating bonds. We borrowed straight from the market, without multilateral policing. The spread for the bonds was calculated by investors based on our credit risk ratings.

This is not a good time to incur debt. Capital is scarce, interest rates are elevated and our credit risk ratings are on the brink of being downgraded – due to a large extent to our propensity to borrow.

More and more, our ability to outgrow our debt is being doubted. Our borrowing has been growing much faster than our economy has been expanding. We are pushing fiscal profligacy into debt to be inherited generations down the road.

Meanwhile, our chronic budget deficit continues to bite on our bankability as a nation. Our balance of payments, which used to be in our favor due to remittances and our blooming BPO sector, has shifted against us. Remittance flow is not about to grow dramatically. Our BPO sector is threatened by artificial intelligence, which is taking the global economy by storm. We are dependent on imported food and hardly have any exports to bank on.

The balance of payments outlook is bleak. Our government is working on limited fiscal space. After the public works scandal, our people’s trust has not been restored.

Normally, before the next year’s budget proposal is announced, the administration undertakes massive public diplomacy to set the stage for acceptance of its spending plan. This administration has not done that. Expect next year’s spending plan to be met with intense suspicion by a public that already feels betrayed by those who govern them.

Add to this the fact that the 2027 spending plan will be an election year budget. Its spending priorities will likely be shaped by partisan goals. This has happened with election-year budgets every time.

Recall the 1969 elections where the Ferdinand E. Marcos administration overspent massively to break the trend and win reelection for the sitting president. The overspending kicked up the inflation rate, forced the peso to depreciate and made borrowing a necessity. All the economic stresses resulting from the overspending produced a sociopolitical crisis we never recovered from.

The Supreme Court recently asked Congress to provide documentation for the massive insertions that marred the 2024 and 2025 budget. This could set the stage for declaring illegal what used to be standard congressional operating procedures that defied scrutiny and allowed entrenched political syndicates to loot public funds at an incredible scale. Hopefully, the High Court will be able to stem the tide of corruption to some extent.

The widespread looting that happened has made our public more vigilant. Last year, Congress opened the bicameral conference committee meetings to the public to address the suspiciousness of our citizens. But that “reform” turned out to be principally cosmetic, with the deals cut away from camera range.

Deliberations for next year’s budget will be doubly watched by a disillusioned citizenry – especially because this is an election-year budget.

The civil society groups that promised to watch over the budget process even more closely is expected to turn up in force. The contentious spending plans will be discussed more extensively in the media.

Budget-making used to be a boring process that most of our citizens ignored. Now it will be the subject of intense public scrutiny – directly resulting from the looting of public funds that just happened.

Hopeful, the scrutiny will cover not just the expenditure side: the projects, the insertions and the so-called “unprogrammed” allocations that might soon be declared unconstitutional. The scrutiny should cover the means by which this government intends to fund a very large budget.

If we want transparency, we should be ready to enforce accountability.