The Philippine government is cautioned against lawmakers’ proposals for a supplemental budget intended to cushion the impact of the Middle East conflict, citing limited fiscal space and the risk of widening the deficit and debt.
In its report, the Congressional Policy and Budget Research Department (CPBRD) said a multi-billion-peso stimulus package will likely pose ‘significant ramifications’ for the country’s fiscal position.
‘The study argues that the country likely does not have the fiscal slack necessary for a supplemental budget. Insisting upon either could potentially aggravate the existing crisis,’ CPBRD said.
This would also likely inflate debt and risk a sovereign debt crisis.
Apart from the identified P238 billion government funds to support programs for the oil crisis, lawmakers are considering several funding proposals, including the bill filed by Sen. Risa Hontiveros seeking an emergency supplemental budget amounting to P52.8 billion.
Separately, Sen. Win Gatchalian earlier said the government may need to pass a P400-billion ‘Bayanihan 3’ supplemental budget to keep the economy afloat amid fuel price shock.
However, the Congressional think tank warned that the enactment of the nearly half-trillion-peso stimulus package would sharply increase the estimated budget deficit from P1.65 trillion to P2.15 trillion.
Assuming that the 2026 gross domestic product (GDP) progresses as forecasted last year, the deficit-to-GDP ratio would rise to 6.9 percent from 5.3 percent.
Economic managers pegged the GDP to expand by five to six percent and the debt-to-GDP ratio to fall by 5.3 percent or P1.61 trillion in 2026.
‘Prevailing macroeconomic conditions both here and abroad, however, would suggest that GDP growth will, at best, be slower than anticipated. This, in turn, implies that a stimulus package, in excess of the current budgetary allocations of the government, will force the deficit-to-GDP ratio past seven percent,’ CPBRD said.
Economy Secretary Arsenio Balisacan also cautioned that a supplemental budget being eyed by Congress could further strain the country’s fiscal position and would likely push the deficit higher.
Fellow economic manager Budget Secretary Toledo said the Rice Competitiveness Enhancement Fund can be an option as a source of funds for the proposed supplemental budget.
Data from the Bureau of the Treasury showed that the budget deficit shrank by 94.35 percent to P5.8 billion as of February from P103.1 billion in the same period in 2025.
Revenue collections went up by 15.5 percent to P830.2 billion, while government expenditures inched up by 1.7 percent to P836 billion.
While the CPBRD has expressed caution about stimulus packages, it noted that subsidies and transfer programs could still be deployed, provided the government remains firmly within the parameters of the 2026 budget.