Infrastructure spending down 48% as corruption mess slows disbursements

By Justine Irish D. Tabile, Senior Reporter

INFRASTRUCTURE SPENDING slumped by 48% year on year in March due to lower disbursements and tighter processes in the wake of a corruption scandal involving government projects.

In its latest National Government (NG) disbursement report, the Department of Budget and Management (DBM) said spending on infrastructure and other capital outlays fell to P59.1 billion in March from P113.5 billion in the same month in 2025.

Month on month, infrastructure spending also declined by 11.1% from P66.4 billion in February.

“The decline was largely attributed to the lower disbursement performance of the Department of Public Works and Highways (DPWH) amid the ongoing completion of carry-over projects and implementation of the current year’s budget,” the DBM said.

“The adoption of stricter validation process for billing claims to ensure project quality and value for money also continued to affect the department’s spending outturn.”

However, the implementation of capital outlay projects under the Revised Armed Forces of the Philippines Modernization Program of the Department of National Defense helped temper the spending decline in March, it said.

For the first quarter, infrastructure spending plunged by 43.5% to P147.8 billion from P261.8 billion a year ago. This accounted for just 11.6% of the government’s full-year program.

Under the 2026 Budget of Expenditures and Sources of Financing, NG cash disbursements for infrastructure and other capital outlays are expected to reach P1.27 trillion this year. This excludes infrastructure subsidies and equities to government-owned and -controlled corporations as well as infrastructure transfers to local government units.

The DBM attributed the first-quarter decline to base effects from the frontloading of projects ahead of the election ban seen during the same period in 2025, the ongoing completion of prior-year obligations, and stricter validation and processing of billing claims.

It said it expects infrastructure spending to pick up in the second quarter as agencies begin obligating funds from allotments released in earlier months.

“Infrastructure departments are, likewise, expected to take advantage of the summer season to expedite construction activities,” it said.

“This will hopefully build up spending momentum and help the recovery of infrastructure spending towards the second half of the year.”

CORRUPTION MESS
Slower infrastructure spending early this year reflects unresolved governance issues and the increasingly corruption-driven nature of the Philippine growth model, said Jose Enrique “Sonny” A. Africa, executive director of think tank IBON Foundation.

“The infrastructure spending slowdown is a direct result of the bureaucratic chilling effect of the flood control and pork barrel corruption scandals last year,” he said in a Viber message.

“Agencies and lawmakers, who shouldn’t even have a role in spending decisions, are much more cautious out of fear of heightened scrutiny over procurement, project quality, and contractor relationships.”

The country was embroiled in a corruption scandal last year linking government officials, lawmakers, and contractors to substandard or nonexistent flood control projects. The controversy slowed government spending and dampened investor and consumer sentiment, which was reflected in the below-target gross domestic product (GDP) growth figures recorded starting in the second half of 2025.

The slump has persisted as lingering effects of the graft mess were compounded by soaring oil prices due to the Middle East war, causing the economy to expand by just 2.8% in the first quarter. This was slower than the 5.4% growth in the same quarter last year and 3% in the fourth quarter of 2025.

Mr. Africa added that “rising political temperature” may be contributing to project implementation delays as the administration could be using its control over infrastructure budgets to paralyze its political opposition.

“This corruption- and patronage-driven distortion of the budget process is also being aggravated by fiscal pressures rapidly bubbling to the surface,” he said. “NG debt has already risen to 65.2% of GDP in the first quarter of the year, which is approaching the highest in 20 years, when it hit 65.7% in 2005.”

Still, Mr. Africa said he expects spending to rebound this second quarter.

“Nonetheless, there is little reason to expect that infrastructure spending will be strong or sustainable enough to substantially boost aggregate growth, which has been in structural slowdown since 2017.”

The government may also be forced to reallocate its resources towards fuel subsidies and other social assistance to respond to the oil shock, he added.

“If so, infrastructure spending may be squeezed not only by corruption-related paralysis but also by a reprioritization under emerging conditions of geopolitical and oil market instability.”

Ser Percival K. Peña-Reyes, a senior research fellow at the Ateneo Center for Economic Research and Development, said the sharp decline in infrastructure disbursements could be attributed to base effects, project completion timing, and implementation delays.

“The outlook for Philippine infrastructure spending in the second quarter of 2026 is for a gradual recovery, but still relatively weak overall,” he said via Facebook Messenger.

“Economists generally expect a stronger pickup in the second half of 2026, rather than an immediate rebound in the second quarter. This is because governance reforms and tighter anti-corruption controls following the flood control controversy have slowed project approvals and payments.”

However, if spending does not rebound, this could weigh on the economy’s prospects as public construction is among the country’s key growth drivers.

“Economists have warned that if infrastructure disbursements remain depressed through the second quarter, quarterly GDP growth could undershoot the government target, unless consumption and exports compensate for the weakness,” he said.

“At the same time, some analysts note that stricter project screening and anti-corruption checks may temporarily slow growth but could improve spending efficiency and project quality over the longer term.”