Philippines Pushes Bigger Defense Spending as China Spat Lingers

A Philippine Coast Guard during a resupply mission in the Second Thomas Shoal in March. (Ezra Acayan/Photographer: Ezra Acayan/Getty )

(Bloomberg) -- The Philippines will continue increasing defense spending as it seeks private sector’s support in safeguarding the nation’s claims in the disputed South China Sea.

Defense Secretary Gilberto Teodoro said he has been pushing for his department’s budget to rise to more than 1% of economic output, excluding military pensions.

The Philippines is trying to upgrade its defense capabilities and catch up with its neighbors at a time when its military assets are sustaining damage from frequent clashes with Beijing in contested waters. Defense budget was increased to 278.1 billion pesos ($4.8 billion) in 2024.

The defense chief is also asking the private sector to structure sale of debt instruments to raise funds that help support the Southeast Asian nation’s claims in the South China Sea.

“It’s up to them to see what the appetite of the market is at any particular time,” he told reporters at the sidelines of a business forum Wednesday. 

The target buyers are investors looking to gain from a potential improvement in the country’s credit rating and other defense industry ventures, he said, adding that “there are a lot of creative ways” to raise funds.

“The important thing is to ease the fiscal position of the government and not sacrifice modernization,” Teodoro said.

--With assistance from Ditas Lopez.

©2024 Bloomberg L.P.

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