Philippines’ slashed defence budget prompts calls for ‘creative financing’

Defence Secretary Gilberto Teodoro Jnr has called for legislative changes to enable ‘buy-now-pay-later’ schemes with extended grace periods

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Philippine coastguard members on alert as a Chinese coastguard ship blocks their way to a resupply mission at Second Thomas Shoal in the South China Sea. Photo: Reuters

Published: 6:13pm, 23 Sep 2024

The Philippines has slashed its next defence budget, raising concerns that the capabilities of its armed forces remain inadequate to defend the country and its territory in the South China Sea even as officials push for “creative financing” to fund the military modernisation programme.

The Philippine House of Representatives last week approved a defence budget of 254 billion Philippine pesos (US$4.5 billion) for 2025, representing a 16 per cent cut from the Department of National Defence’s (DND) original proposal. It does not include any allocations for new military equipment purchases.

The reduction is in stark contrast to President Ferdinand Marcos Jnr’s earlier approval of a 1.39 trillion pesos modernisation “wish list” from the Armed Forces of the Philippines, aimed at shifting its focus from internal security to external defence.

In June, Marcos Jnr vowed at a security forum in Singapore to “develop our capacity to project our forces … to protect our interests and preserve our patrimony” in the West Philippine Sea – the country’s term for its territorial waters in the South China Sea.

The sum that he has approved, however, was not reflected in the amount allocated for the military’s modernisation programme next year.

The Department of Budget and Management reduced the proposed defence budget by 51 billion pesos and left only 50 billion pesos in actual funding for the Armed Forces’ modernisation programme. Defence Secretary Gilberto Teodoro Jnr clarified the amount would only cover payments for previously ordered equipment, not new acquisitions.