If not for corruption, the Philippine economy might have been growing by 6 to 6.2 percent, according to Finance Secretary Ralph Recto.
This was disclosed by Recto at a Senate subpanel on finance’s Tuesday hearing on the proposed 2026 funding of the Department of Finance when he was asked by Sen. Sherwin Gatchalian why the government fails to surpass its revenue targets.
According to Recto, there are various factors, but he particularly named corruption among these.
‘Nakikita natin na because of corruption issue na nangyari at nakita natin in the last few years, dahil nga dito sa flood control program – nagtataka ako, sa laki ng ginagastos ng ating pamahalaan ay dapat mas malaki ang growth ng ating ekonomiya,’ said Recto.
(We can see that because of the corruption issues that have happened which we’ve seen in the past few years, especially in the flood control program – I find it puzzling that despite the large amount our government is spending, our economic growth isn’t higher.)
Big spend on tainted projects don’t convert to economic growth
‘So this explains that in spite of having this level of expenditure, dahil napunta ang parte ng capital outlay doon sa ghost projects or substandard projects – halimbawa sa flood control – ay apektado ang growth natin. Ibig sabihin, kung hindi napunta sa corruption ang parte ng budget na yan ay siguro ang ekonomiya natin would have been growing by 6 to 6.2 percent at mas malaki ang koleksyon ng Bureau of Internal Revenue at Bureau of Customs,’ he added.
(This explains that despite this level of expenditure, part of the capital outlay went to ghost projects or substandard projects – for example, in flood control – and that has affected our growth. This means that if that portion of the budget hadn’t been lost to corruption, our economy might have been growing by 6 to 6.2 percent, and the collections of the Bureau of Internal Revenue and the Bureau of Customs would have been higher as well.)
Philippine gross domestic product (GDP) expanded by 5.5 percent in the three months ending June, up marginally from 5.4 percent annual growth in the first quarter.
However, this marked a significant slowdown from the 6.5 percent growth recorded in the second quarter of 2024 and fell short of market expectations. An Inquirer poll of economists projected a 5.6 percent increase for the June quarter.
Before this, Gatchalian – who chairs the Senate panel on finance – said that since 2015, the Philippine government has only surpassed its target by three times: in 2020, 2021, and 2022.
The senator said the government failed to surpass its targets in the subsequent years, but saw a ‘very good trend in the last three years’ in terms of non-tax revenues.
Meanwhile, amid the corruption scandal hounding some government agencies at present, Recto said they observed a ‘slow down’ in paying taxes. He, however, maintained that it remains to be ‘manageable’ at present.