AS the government narrowed down the gap in its current infrastructure spending from the previous year to a single digit, President Ferdinand Marcos Jr. is confident his administration can exceed the year-on-year fund utilization for such projects by the end of 2026.
The chief executive made the statement during the Foreign Correspondents Association of the Philippines (Focap) Presidential Luncheon at the Diamond Hotel in Manila last Friday.
He noted that government spending slowed down during the first half of the year after he ordered a review of the 2026 National Expenditure Program (NEP), which prevented the early bidding for government contracts.
The Department of Budget and Management (DBM) earlier said the audit was done so it can validate the processes for infrastructure payment claims and documentary compliance requirements for contractors as part of the ongoing government crackdown against anomalous flood control projects.
Usually, Marcos said, government contracts for the implementation of infrastructure projects are done months before a NEP is passed into law by Congress and becomes a General Appropriation Act so it can be implemented by January of the following year.
However, he said, in the case of the 2026 NEP, the bidding process for the infrastructure projects were only completed towards the end of the first quarter of the year because of the review.
‘That’s what it-that’s what delayed the public spending,’ Marcos said.
Absorptive capacity
Last month, DBM reported that infrastructure and other capital outlays dropped to P268.4 billion from January to May or a 42.9-percent reduction from P471.5 billion year-on-year.
‘We have, we have done, taken very many measures to, uh, accelerate the rate of public spending. And as of the end of the second quarter of this year, we are only at a shortfall of about seven percent year-on-year in terms of public spending. We will make that up for the rest of the year,’ Marcos said.
He noted it took them some time to address the said spending gap because they also needed to consider the absorptive capacity of government agencies and contractors.
‘They can only do so much work. So you’re throwing money at the problem simply doesn’t solve it, doesn’t make anything better. And that is the balance that we have been, uh, that we have tried, what we are trying to manage right now,’ Marcos said.
With the trend, the President disclosed he is optimistic the government fund utilization for infrastructure projects can exceed that of last year.
‘I’m confident we will be able to catch up and exceed the year-on-year public spending by the first-by the last quarter of this year,’ Marcos said.
Economic resilience
Also boosting overall government spending is its assistance for sectors affected by the Middle East conflict such as fuel and rice subsidy as well as cash aid, which the government continues to implement to regulate inflation and maintain business and consumer confidence, according to Marcos.
‘[Price] volatility erodes [business and consumer] confidence. And that erosion in confidence means people do not spend their money, uh, because they don’t know what is going to happen the next month or two months, three months from now. And that is, that is what we are, that is what we are having, that’s what we are having to deal with,’ the chief executive said.
However, the Marcos administration said it is looking beyond the Middle East war by putting in place measures that will boost the country’s resilience from future global crisis such as signing trade agreements with ‘non-traditional’ partners and creating a business-friendly environment in the country through ease of doing business measures and incentives.
‘We have taken the measures and those measures should allay the fears of investors and encourage them to, to invest more in the Philippines. And I, I do believe that if we look at the numbers in terms of investments that are coming into the Philippines, they continue to increase,’ Marcos said.
The Philippine Statistics Authority reported that the investments secured by the country in the second quarter of the year rose to P541.51 billion from P312.87 billion in the same period last year.
The increased government spending, Marcos said, will help boost the country’s ‘disappointing’ economic growth, which slowed down to 2.3 percent in the second quarter of the year from 2.8 percent from January to March and 5.4 percent year-on-year.
‘The growth rate is heavily dependent on public spending,’ Marcos said.