‘Seismic changes in the global order’

Thus said Lawrence Wong, Singapore’s Prime Minister, in issuing a warning amid the worrisome pronouncements made by the rather impetuous United States of America’s returning President Donald Trump. These pronouncements relate to the issuance of tariffs on all countries doing trade with the US government.

“The likelihood of a full-blown global trade war is growing … global growth will slow down,” Wong continued, noting that the US government has made pronouncements that contradict long-held conventions on international trade and economic development that will benefit small economies in the world.

Despite all these ominous signs of a possible global economic meltdown, Wong assured his people that with a strong resolve to capitalize on their resources, and with his ideas of collaborating with like-minded countries, Singapore is better placed to address such “seismic changes in the global order.” For one, his country’s government has, over the years, been highly protective of the national interest as seen in ensuring that they keep their financial and other material wealth reserves, i.e., gold not diminished, but continually being increased.

But can we say the same thing about our government?

We are a country that is close to being financially kaput, given the rate at which government officials, those who have made plunder a normal part of being political leaders, act.

Some say that while the previous Duterte administration normalized extrajudicial killings and misogynistic attitudes toward women and other gender identities, this new administration of the younger Marcos—Ferdinand Jr.—has also normalized and even decentralized corruption even to plunder levels.

Our government, through the Central Bank, has sold about 25 percent of our gold reserves, since gold fetched very high prices in the global market in the past few years, as they rationalized. But reserves are called such because these valuable sources of wealth that never depreciate will shield us if our financial situation puts us in danger of becoming bankrupt.

But the Bangko Sentral ng Pilipinas (BSP) claimed in their statement last September 2024 that the amount of gold reserves sold will not affect our country’s gross international reserves (GIR).

The report added that even with the sale of some of our gold reserves, our GIR remains robust and has even increased to $107.9 billion last year from $103.8 billion as of Dec. 31, 2023.

We can liken the sale of our gold reserves to the sad stories of how indigenous families have made the faulty decision of selling off their ancestral lands (both Blaan and Magindanawn families, in General Santos City, for example). Wide swaths of Blaan ancestral lands in the mountainous barangay of San Jose are no longer the property of the indigenous occupants of the city, who are now among the city’s poor populations.

But going back to the BSP report. The next part of the report seems ominous. “The GIR level provides adequate external liquidity buffer and is equivalent to 7.8 months’ worth of imports of goods and payments of services and primary income.”

I dread the day when the Philippine government will no longer be able to pay its debts. Like the families living on loans, they need to translate valuable assets like gold reserves or incur more loans to address budgetary shortfalls. In the case of families that live on loans as part of their lives, it will entangle them in a precarious debt trap they cannot extricate easily from.

According to an incisive economic analysis done by the Philippine Institute for Development Studies (PIDS), our national debt as of January 2025 is a whopping P16.312 trillion. Most ordinary Filipinos will find that amount mind-boggling, to say the least. They could not even count to a million in financial assets because they have none of that amount. (Unlike most rich children of government officials or celebrities who can afford to splurge on bags worth P1.3 million, like a Hermes-Birkin signature bag).

A Bureau of the Treasury computation translates the national debt to about P141,825 for each one of us, a debt we did not personally incur.

In its report, the PIDS has also computed the size of our economy as more than P22 trillion in 2024 (at constant 2018 prices). This means that our national debt is about 73 percent of our revenues or income from last year. Is this a sound financial management strategy?

The Philippines is not yet among middle-income or high-income countries like Singapore. As such, according to my economist friend, we are only allowed to incur debts of around 35 to 39 percent of our debt-to-GDP ratio.

Yet, Singapore, as a highly dynamic economy, has never for once sold its reserves. Because, as PM Wong says, his country needs to brace for the worst economic crisis that looms with an unpredictable president of the country that influences most parts of the world through its mighty dollar.

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