Infrastructure spending declines for fifth straight month in Nov.

Government infrastructure spending fell further in November as the flood control project scandal continued to unfold, the Department of Budget and Management (DBM) said.

Infrastructure and capital outlays plunged by 45.2 percent in November to P48.0 billion from P87.6 billion a year earlier, and the DBM said “the spending performance of the DPWH (Department of Public Works and Highways) continued to post negative growth amid the ongoing probe and crackdown on corruption issues.”

“This consequently slowed down the implementation of its various infrastructure projects nationwide and affected the prompt submission of progress billings by contractors and processing of payment claims,” it added.

The scandal broke after President Ferdinand Marcos Jr. said in July that substandard projects had led to massive flooding in Metro Manila and other parts of the country.

It has led to a shake-up at the DPWH, leadership changes in Congress and a Cabinet revamp that cost Amenah Pangandaman her post as Budget secretary.

Those directly involved in the scandal, however, have yet to be jailed and the impact on spending and sentiment has yet to dissipate despite government promises of reforms.

Infrastructure and capital outlays were also lower year to date, falling by 16 percent to P991.1 billion from P1.18 trillion in January-November 2024.

“Infrastructure spending was weighed down significantly by the contraction of DPWH’s disbursements during the period in the wake of flood control corruption issues,” the DBM said.

“On the other hand, subsidies were lower year on year owing to minimal requests for subsidy releases by the National Irrigation Administration given their available cash holdings,” it added.

The department also said that funding for the National Health Insurance Program was charged against Philippine Health Insurance Corp.’s operating budget, which contributed to the spending drop.

About P140.4 billion remained available for release from the regular budgets of departments (P97.7 billion), special purpose funds (P42.6 billion) and automatic appropriations as of Nov. 30, 2025.

This was despite the 2025 obligation program of P6.33 trillion already having been exceeded following additional releases from continuing, automatic and unprogrammed appropriations.

The release of the remaining funds depends on the agencies concerned submitting special budget requests and required documents, which will be reviewed by the DBM

Based on preliminary data, around P74.3 billion in allotments was released in December, which could have supported government spending toward the end of 2025.

Source: Manila Times

Gradual recovery seen following growth miss

Economic growth is expected to gradually recover this year on the back of increased government spending and exports, a Cabinet official said, following a marked slowdown in 2025.

“[T]he whole year [has] four quarters right?,” Finance Secretary Frederick Go told reporters on Friday.

“We’re not going to get there in the first quarter ... I guess, if we do everything right, it’s progressive. It’s [going] to happen progressively.”

Gross domestic product growth slumped to 4.4 percent in 2025, from 5.7 percent a year earlier, as a massive corruption scandal weighed on spending and sentiment.

The result marked the third year that the government missed its growth targets, although officials have expressed optimism of a rebound beginning 2026.

The target for this year has been lowered to 5.0-6.0 percent from 6.0-7.0 percent to take into account the continued impact of the corruption issue and external uncertainties. That for 2027 was also cut to 5.5-6.5 percent from 6.0-7.0 percent.

Go claimed that foreign investors remained interested in the country and added that exports would play a significant role in boosting economic growth.

“Export actually is the bright spot in all of that, when you look at [gross domestic product] growth,” he said.

Government spending, which slumped in the third and fourth quarters, is expected to improve, and Go said that the Finance and Budget department met earlier this week to clear the amount to be spent for January-March.

“Actually I can give you the number — it’s P1.4 billion for primary spending for the first quarter,” he said.

The “top spenders,” which include the Department of Public Works and Highways, the Department of Education, the Department of Health, the Department of Agriculture and the Department of Transportation, were also present during the meeting.

“We agreed with them what their spending will be, how much money will be released,” Go said.

As for the revenue agencies, he said “The BIR (Bureau of Internal Revenue) has their targets, the BOC (Bureau of Customs) has their targets.”

“I think their targets are achievable — I’m hopeful we will achieve those targets.”

Revenue goals have been lowered given downwardly revised economic growth targets, with the government now aiming to collect P4.824 trillion this year instead of P4.983 trillion.

The target for next year was likewise reduced to P5.122 trillion from P5.366 trillion while in 2028, collections were now projected to reach P5.568 trillion instead of P5.914 trillion.

Based on earlier data, the BIR has been tasked to collect P3.431 trillion, lower than the P3.579 trillion under the 2026 Budget of Expenditures and Sources of Financing.

The BOC goal was likewise reduced to P1.003 trillion from P1.013 trillion. Nontax revenues, on the other hand, were set at a higher P349.9 billion from P249.1 billion.

Both agencies missed their targets last year. The BIR collected P3.105 trillion, short of its P3.232-trillion goal, but this was still above the P2.83 trillion recorded in 2024.

The BOC, meanwhile, generated P934.4 billion, below the P958.7-billion target, although this was again higher than the P916.674 billion collected in 2024. 

Source: Business World

Infrastructure spending boost seen key to faster PH growth in 2026

A recovery of government infrastructure spending after a deep slump triggered by the flood control scandal would be the most effective way to accelerate growth, ANZ Research said, arguing that the boost from interest rate cuts is still debatable in an environment of weakening confidence.

In a note to clients, Sanjay Mathur, ANZ’s chief economist for Southeast Asia, said that while the Bangko Sentral ng Pilipinas (BSP) may opt for one last final rate cut to support the economy, there are repercussions from the graft fallout that may not be effectively addressed through monetary policy easing.

“There has been a downshift in the growth in the Philippines as repercussions from governance-related issues in public infrastructure projects have not receded,” Mathur wrote. “The resulting weakness in public spending, particularly on the capital side, has permeated into the household and business sectors.”

“The efficacy of the monetary policy easing cycle against the backdrop of low household and business confidence is debatable,” he added. “In our view, a revival in government spending is the most appropriate pathway to faster growth.”

Lowered growth target

Earlier this month, economic officials in the Marcos administration trimmed their 2026 growth target to 5 to 6 percent, from the previous goal of 6 to 7 percent, underscoring the economic costs of the sweeping investigation into anomalous flood control projects.

ANZ’s Mathur estimated that growth in the fourth quarter of 2025 may have settled at a “sub-potential” rate of 4.5 percent, which, he said, is likely to validate the need for an additional cut in the policy rate.

To help “compensate” for the effects of the graft fallout, the BSP cut its benchmark rate by a quarter point to 4.5 percent last December, bringing total reductions since the easing cycle began in August 2024 to two percentage points.

Source: Inquirer