By Justine Irish D. Tabile, Senior Reporter
INFRASTRUCTURE SPENDING plunged by an annual 35% in May amid strengthened review and validation processes, according to the Department of Budget and Management (DBM).
At the same time, experts warned that prolonged government underspending could further weaken economic growth and urged the Marcos administration to overhaul infrastructure project implementation and prevent anti-corruption efforts from stalling public spending.
In its latest National Government disbursement report, the DBM said infrastructure and other capital outlays fell by 35.3% to P80.1 billion in May from P123.8 billion in the same month in 2025.
“The year-on-year decline primarily reflects the implementation of strengthened review, audit, and validation procedures for infrastructure payment claims, as well as documentary compliance requirements for contractors,” the DBM said in a statement.
“These enhanced safeguards have affected the timing of some infrastructure disbursements, particularly on Department of Public Works and Highways (DPWH) projects,” it added.
Month on month, infrastructure spending surged by 93.1% from P41.5 billion in April.
In the first five months of the year, infrastructure and other capital outlays slumped by 42.9% to P269.4 billion from P471.5 billion in the same period a year ago.
The DBM attributed the decline to the “implementation of enhanced governance measures and stricter review and validation procedures for infrastructure projects, following the government’s intensified efforts to strengthen accountability and ensure the prudent use of public funds.”
“These measures have affected the timing of some DPWH infrastructure disbursements while reinforcing safeguards for public spending,” it added.
Francisco Cid L. Terosa, an associate professor and former dean of the School of Economics of the University of Asia and the Pacific (UA&P), warned that weak infrastructure spending may have hurt economic growth in the second quarter.
“The continued weakness in infrastructure spending could cut second-quarter gross domestic product (GDP) growth by about 2 to 3 percentage points relative to second quarter of 2025 GDP growth,” he told BusinessWorld via Viber.
The Philippine Statistics Authority is set to release preliminary second-quarter GDP data on Aug. 7.
While spending may rebound as releases accelerate, Mr. Terosa said “elevated energy prices plus tight financial conditions and high borrowing costs… could deflate the effects of a spending rebound.”
“Infrastructure spending should grow by 10 to 15% on average for the rest of the year to meet the full-year growth target of 3.5 to 4.5%,” he added.
The Development Budget Coordination Committee projected the economy to grow by 3.5%-4.5% this year, lower than its previous projection of 5%-6%.
OVERHAUL NEEDED
“The National Government will have to overhaul its execution processes at the implementation level to minimize leakages,” UA&P economist Marco Antonio C. Agonia said in an e-mail.
“There are already regulations in place supposedly to prevent these things from happening, but if the ‘rules of the game’ that implicitly create loopholes for local bid-rigging and weak oversight persist, further high-level reforms may have limited efficacy,” he added.
Mr. Agonia said the government should consider assigning budgets based on agencies’ absorptive capacity instead of politically motivated discretionary spending.
“The sweeping pause in infrastructure spending, while done to wipe the slate clean, also harmed economic growth prospects,” Mr. Agonia said.
Jonathan L. Ravelas, a senior adviser at Reyes Tacandong & Co., said the government must show that its campaign against corruption does not have to undermine growth.
“What is needed is a system that quickly identifies and removes questionable projects while accelerating those that are transparent, economically sound, and ready for implementation,” he said in a Viber message.
Ser Percival K. Peña-Reyes, a senior research fellow at the Ateneo Center for Economic Research and Development, said the government should avoid treating anti-corruption and infrastructure spending as competing objectives.
He said tighter procurement oversight and investigations during the Aquino administration improved governance in some respects but also contributed to implementation delays, lower public spending and weaker economic growth during its early years.
“The lesson is not that anti-corruption efforts should be relaxed, but that they must be designed so they do not paralyze project execution,” Mr. Peña-Reyes said.
Infrastructure spending has one of the highest fiscal multipliers in the Philippine economy because it creates jobs, raises demand for domestic materials and improves long-term productivity, he said.
Philippine Institute for Development Studies Senior Research Fellow John Paolo R. Rivera said accountability and infrastructure spending should go hand in hand.
“Key is to investigate anomalous projects while allowing legitimate, high-impact projects to proceed,” he said. “Good governance should improve, not delay, public investment.”
Mr. Peña-Reyes said persistent leakages despite reforms in budgeting, procurement and transparency show that the problem is no longer primarily the absence of rules but weaknesses in implementation and institutions.
He said procurement reforms have made the system more rules-based, but multiple safeguards can also create bottlenecks when officials become overly cautious about making decisions.
“The result is slower project implementation without necessarily eliminating opportunities for corruption,” he added.
Institutional capacity also remains uneven across implementing agencies and local government units, Mr. Peña-Reyes said.
Corruption risks have also evolved beyond outright procurement fraud, with leakages occurring through inflated cost estimates, excessive variation orders, weak contract supervision and poor-quality implementation, he said.
Such practices are often more difficult to detect because they may occur after contracts have been legally awarded.
Mr. Peña-Reyes said reforms should focus on professionalizing procurement and project management, expanding digital monitoring and ensuring accountability mechanisms operate quickly and predictably.
“The objective should be a system that is both clean and capable — one that prevents leakages while still delivering infrastructure on time and supporting economic growth,” he said.
‘EVERY PESO MUST WORK HARDER’
Mr. Rivera said the government should ensure “every peso must deliver the greatest public value” amid limited fiscal space.
“Priority should go to productive investments such as infrastructure, education, health, agriculture, and climate resilience while strengthening project evaluation, transparency, and monitoring to ensure value for money,” he added.
Mr. Ravelas said the government should prioritize clean and high-impact investments in infrastructure, flood control, food and energy security, logistics, and digital connectivity.
“At a time when global uncertainties, including tensions in the Middle East, are putting pressure on growth and fiscal resources, every peso must work harder. The goal is not simply to spend more or spend less, but to spend smarter, faster, and cleaner to sustain growth, create jobs, and strengthen public trust,” he added.
Mr. Agonia said the government should pursue longer-term, high-multiplier investments such as infrastructure master plans and human capital programs while making budget documents transparent and easily accessible.
He said the government could also use the public-private partnership framework to tap financially and technically capable organizations to carry out these projects.
“This is more pressing now that the Philippines may lose out on concessionary financing schemes with multilateral organizations following its ascension to upper-middle income country status,” he added.
TRANSPORT PROJECTS
The Marcos administration should also fast-track transport projects after years of delays.
“The administration cannot afford another detour. The journey must end by rediscovering the strengths we once had,” Rene S. Santiago, an international consultant on transport development and former president of the Transportation Science Society of the Philippines, said in a Viber message.
Mr. Santiago urged the government to prioritize feasible transport projects, stressing the need to seize doable solutions that directly address mobility issues, like deploying electric buses.
Transportation Acting Secretary Giovanni Z. Lopez said the government is working to fast-track its projects to ensure the timely completion of transportation projects.
“The tunnel from Valenzuela to Quirino Avenue Station (of the Metro Manila Subway project) is now complete, as well as the North Avenue to Tandang Sora station. This means that we are prioritizing big-ticket projects,” Mr. Lopez said in a Viber message.
The tunneling works for key sections of the Metro Manila Subway project has been completed, which advances its overall completion rate to 60%.
“We can expect the project’s completion by 2028. Before the end of Mr. Marcos’ term, (two) stations from Valenzuela to Quirino will have a demonstration run,” Mr. Lopez said.
Meanwhile, Institute for Climate and Sustainable Cities Urban Mobility Campaigns Officer Amber Garma said the Philippines should also focus on expanding active transport projects, and the upgrading of walkways in the country.
Ms. Garma urged the government to boost funding for active transportation, saying higher investment is needed to upgrade infrastructure and cushion commuters from rising fuel costs and price volatility. — with Ashley Erika O. Jose
