October 15, 2025 l Business Mirror
Getting a bad international press, the Philippines direly needs a good PR (public relations) campaign. Lame denials from the Department of Finance, side-stepping the issue and ranting will not do. The bashing came alongside the biggest corruption scandal exposed in the nation’s history. Or a trillion pesos in flood control projects alone.
It matters not that government investment czar Frederick D. Go says the stock market dove only 1.6 percent and not 12 percent in three weeks when the scandal blew up. Bloomberg (September 30, 2025) postulates that our stock market underperformed beside Asia peers and reached a 5-month low. It said equity sell-offs are expected due to “potential economic fallout from the corruption scandal.” Numbers from the Philippine Stock Exchange Aggregate Company Financials dropped 2.2 percent year-to-date (dated October 9, 2025).
An economist of a leading bank told its preferred clients last week that gross domestic product (GDP) growth rate this year will be compromised by the slack in government expenditure, an important GDP component. The 2025 budget usage has already been stalled, and the 2026 version will be severely audited to constrain smooth flow. Underspending could become a fiscal virtue to stymie graft.
Gretchen Ho and Korea
EVEN individual Filipinos are not spared. The Gardermoen Airport authority in Oslo, Norway, refused to exchange 380 dollars to the local currency of a tourist, the mother of broadcast journalist Gretchen Ho, because of concerns of “corruption and money laundering” here. Manila responded saying Norway was unaware that the country had been delisted from the “grey list” for money laundering. The grey list is primarily to stop terrorist financing through money laundering. Why did the frontline men at the airport use the “corruption” issue?
Meantime, no less than the president of South Korea (Lee Jae Myung) has suspended the release of some P28-B worth of financing for the flagship project for modular steel bridges in the rural areas for fear of a corrupt deal. The DOF was correct in saying there is no actual South Korean loan as such; but it is precisely because it has been suspended before it took off. Isn’t this shameful?
American view and FDI
NO less than the powerful US State Department, in its 2025 “Investment Climate Statement,” disclosed that corruption in the Philippines is “widespread and long-standing,” buttressed by weak law enforcement and politically weaponized institutions. That’s a sure-fire formula to discourage sovereign trust and stifle investment. This damaging red flag assessment by the most powerful nation on earth came on the heels of the mandate of the Independent Investigation for Infrastructure for a “hold departure” order for many big fish legislators, bureaucrats, and government contractors, infamously including its third-highest and fourth-highest elected officials: former Senate President and Speaker of the House, alongside four other senators.
That means they are all a “flight risk” facing potential court cases of billions in magnitude. The world knows our stink. Little wonder that the Asean Secretariat of the Unctad claimed that as of its latest record, the Philippines, with $8.9 billion in foreign direct investment, is less than half of Vietnam’s FDI of $18.5 billion, Indonesia’s $21.6 billion and Singapore’s $159.6 billion. This is an objective and clear barometer of how foreigners look at the Philippines as an investment destination. That “we have not heard” of any foreign investor leaving the country this year does not argue against our lack of attraction as an investment grade, globally.
Debt-to-GDP ratio and bribery
THE internationally accepted debt-to-GDP ratio is a metric that shows the ability of a country to pay its debt based on the growth of its economy through the GDP. The global rule of thumb for emerging economies like the Philippines is a debt-to-GDP ratio threshold of 60 percent, which the country already breached at the end of last year. Our GAA (national budget) targets total debt by the end of 2025 at P17.35 trillion from 2024’s P16.06 trillion, or a percentage hike of 8.09 percent. This percentage is HIGHER than the projected GDP growth rate of 5.5 percent (another red flag), and the latter may not even be attained due to the expected drop in the Government’s actual expenditure usage.
What will happen to our already precarious debt-to-GDP ratio by the end of this year? The predilection of the government to continue on a borrowing spree astounds common sense resulting from a perennial fiscal deficit over the years. In 2024, the Philippines had a P1.506-trillion deficit (earnings like taxes smaller than expenditure) and yet insisted on a gargantuan GAA of P5.768 trillion. The fiscal deficit is 5.90 percent of GDP; quite far from its ideal target of only 3.8 percent.
Why?
And only to realize now that the bloated budget only went into many ghost and substandard projects; inserted through sleight-of-hand or through the unprogrammed funds. This is the real financial tragedy.
Conclusion
THERE’S still another addition to the “cost of corruption” here. Business tycoon Manuel V. Pangilinan told the Financial Executives Institute of the Philippines (Finex) last week that these graft scandals could lead to the downgrading of the credit rating of the country. We know that, among others, such downgrade can result in higher interest rates (imagine its impact on a $137.63 billion total debt in 2024) and the exchange rate since we are on trade deficit (imports more than exports). Both are inflationary.
So, the Philippines is at a crucial crossroads now. Not only are citizens at the edge of their rage, not knowing the denouement of this struggle for national survival; but the whole world is perplexed that this once vibrant democracy and second-best nation in Asia (next to Japan) has managed to shoot itself into infamy before the eyes of the world.
What the Marcos government and the people will do SOON in response to this real and perceived crisis will be the key to which road the Philippines will take at today’s crossroads.
Quo Vadis, Philippines?
***The views expressed herein are his own and do not necessarily reflect the opinion of his office as well as FINEX. For comments, email bingo8dejaresco@gmail.com. Photo is from Pinterest.