Every time the Philippine government announces a new record in national debt, a familiar headline usually follows.
“Every Filipino now owes more than ₱150,000.”
The statement is simple, easy to understand and often repeated in public discussions about government borrowing. But according to economist Dr. Jesus Felipe, it also gives many people the wrong impression about how public debt actually works.
Speaking during the launch of the book The Philippine Economy Toward 2050 at De La Salle University on August 26, 2026, Felipe challenged what he considers one of the most common misconceptions in economics.
“Please, to the journalists, don’t ever say that every Filipino owes 150,000 pesos.”
His objection was not about arithmetic. It was about economics.
Government debt is someone else’s asset
Felipe asked the audience to think about government debt from another perspective.
When the Philippine government issues treasury bills or treasury bonds, who buys them? The answer includes banks, insurance companies, pension funds, investment funds, corporations and individual investors.
Those investors hold government securities as part of their assets.
“Government debt is an asset of the private sector,” Felipe explained.
This means every peso that appears as a liability on the government’s balance sheet also appears as a financial asset somewhere else in the economy.
This is why Felipe believes dividing the national debt by the country’s population can be misleading. While the government records a liability, someone else owns the corresponding financial asset.
A household loan is different
Felipe argues that many people instinctively compare government borrowing with taking out a housing loan or using a credit card.
The comparison sounds intuitive because both involve debt, but he believes they are fundamentally different.
A family must first earn enough income to repay its loan. If it cannot make its monthly payments, it may default.
Governments that issue their own currency operate differently.
“Government does not need your money to spend,” Felipe told the audience.
This statement is controversial because it challenges the way many people have been taught to think about public finance.
Felipe’s argument is that households are users of money, while sovereign governments that issue their own currency occupy a different position within the monetary system. Then why issue government bonds?
If the government can issue pesos, why does it continue selling treasury bills and treasury bonds?
Felipe explained that government securities perform an important function in the financial system.
“Government bonds are basically savings accounts at the central bank,” he said.
Banks and investors exchange part of their deposits for government securities, earning interest while helping the financial system manage liquidity.
Under this explanation, treasury bonds are not merely loans that allow government to obtain money before spending.
They are also financial instruments that provide safe investment opportunities while supporting monetary operations.
Peso debt is different from dollar debt
Felipe emphasized another distinction that often receives less attention. Not all government debt carries the same level of risk.
“Have you ever heard the Filipino government defaulting on debt in pesos? Never.”
He then contrasted that with foreign-currency borrowing.
“When you borrow dollars, you’re in a different world.”
Unlike pesos, the Philippine government cannot create U.S. dollars.
Foreign-currency obligations must ultimately be paid using foreign exchange earned through exports, overseas remittances, foreign investment or international reserves.
Felipe pointed to the country’s debt crisis during the 1980s as an example of why foreign-currency debt deserves separate consideration.
Does a higher debt-to-GDP ratio always mean danger?
Public discussion often focuses on debt-to-GDP ratios. Once government debt reaches a particular percentage of national output, many assume the country is approaching a fiscal crisis.
Felipe questioned this interpretation. He argued that no single debt ratio automatically determines whether a country’s finances are healthy or unsustainable. Instead, he believes economists should ask additional questions.
Who owns the debt?
Is it denominated in pesos or foreign currency?
What is the government spending the borrowed money on?
Can the economy continue producing enough income to support those obligations?
Felipe pointed to countries such as Japan and Singapore, which have significantly higher levels of public debt than the Philippines but continue to maintain investor confidence and stable financial systems. Rather, debt should be evaluated in its proper economic context instead of relying on a single ratio.
The deficit has another side
Felipe also offered another way of thinking about government deficits.
When government spends more than it collects in taxes, it records a fiscal deficit, but someone else records the opposite.
“The government’s deficit is the private sector’s surplus.”
In his explanation, government spending creates financial assets that ultimately become income, savings or investments held by households and businesses.
This accounting relationship, he argues, is often overlooked in discussions about fiscal deficits.
A more useful debate
Felipe’s presentation does not suggest that governments should borrow without limits or ignore fiscal discipline. Instead, he believes public discussion should move beyond simply asking whether the national debt has increased.
The more meaningful questions, he argues, are whether government spending expands the country’s productive capacity, improves infrastructure, strengthens education, supports industrial development and raises long-term economic growth.
Those issues may ultimately matter more than the size of the debt alone.
Whether one agrees with Felipe’s conclusions or not, his presentation offers a useful reminder that government finance is more complicated than household finance.
National debt is certainly a liability of the government, but as Felipe reminded his audience, it is also an asset held by the private sector.
