Philippine infrastructure spending declines for fifth straight month in Nov.

PHILIPPINE GOVERNMENT spending on infrastructure fell for a fifth straight month in November, underscoring how a widening corruption investigation has weighed on public works implementation and fiscal momentum.

State disbursements for infrastructure and other capital outlays plunged 45.2% to P48 billion from a year earlier, according to data released by the Department of Budget and Management (DBM) on Jan. 31. Spending also declined 27.2% from October.

November marked the fifth straight annual contraction since July, when infrastructure spending dropped 25.3% after allegations of corruption linked to flood control projects surfaced. The scandal has since triggered investigations, leadership changes and tighter scrutiny of project approvals, slowing the pace of government outlays.

“The spending performance of the DPWH (Department of Public Works and Highways) continued to post negative growth amid the ongoing probe and crackdown on corruption issues,” the DBM said.

The fiscal slowdown curtailed project execution and prompted contractors to submit progress billings and payment claims immediately, the agency said, as authorities sought to strengthen controls and oversight.

The DPWH, which has been at the center of the controversy, has undergone a budget overhaul, the dismissal of several officials and a continuing investigation that weakened sentiment and slowed activity across the construction sector.

The fallout has also spilled over to the broader economy, weighing on household spending and private investment.

From January to November, total government infrastructure spending fell 16% to P991.1 billion from a year earlier. This accounted for 65.51% of the government’s P1.51-trillion full-year infrastructure program.

“Infrastructure spending was weighed down significantly by the contraction of DPWH’s disbursements during the period in the wake of flood control corruption issues,” the DBM said.

Broader infrastructure disbursements, which include capital components of subsidies and equity infusions to state-owned companies, as well as transfers to local government units, also weakened. These fell 13.3% year on year to P1.2 trillion in the first 11 months of the year.

Public Works Secretary Vivencio “Vince” B. Dizon said last month the agency was seeking to lift spending while ensuring public funds are deployed prudently.

The DPWH has set a spending program of P200 billion to P250 billion this quarter, signaling an effort to regain momentum after months of subdued disbursements.

Despite the drag from infrastructure, total government spending edged up 2.5% to P5.41 trillion in January to November, equivalent to about 89% of the P6.08-trillion full-year program.

For the final stretch of 2025, the DBM said overall spending would be supported by payments to cover personnel service shortfalls across line agencies, including the release of benefits and the creation or filling of government positions.

“Based on a preliminary report of allotment releases, some P74.3 billion worth of allotments were released in December 2025, which might have helped propel spending for the remainder of 2025,” the agency said.

Additional spending drivers include the rollout of social programs such as disaster relief and recovery, education subsidies and funding for local development initiatives, the DBM added.

WAIT-AND-SEE STANCE
Economists said the corruption probe has been a major factor behind the persistent contraction in infrastructure outlays.

Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said the scandal has forced authorities to adopt a more cautious approach to public works spending.

“This was caused by the continued caution versus the risk of corruption for various government spending on infrastructure,” he said in a Viber message.

He added that the pullback in government spending has been a key contributor to the recent softness in economic growth, given the sector’s role as a major pillar of gross domestic product.

The slowdown has also weighed on investor sentiment, prompting a wait-and-see stance that curbed private investment, Mr. Ricafort said. Against this backdrop, he noted it would be difficult for the government to meet its P1.51-trillion infrastructure target for 2025.

“Yes, tough one, as manifested by the weaker-than-expected local GDP data,” he said.

Philippine economic growth slowed sharply to 4.4% last year from 5.7% in 2024, as the infrastructure pullback dampened public spending and eroded confidence among consumers and businesses.

The expansion was the weakest in five years, excluding the 9.5% contraction in 2020 at the height of the pandemic, and the slowest since 2011 if the pandemic period is set aside.

Still, Mr. Ricafort said a rebound in infrastructure spending is likely this year, supported by catch-up programs anchored on stronger governance and anti-corruption measures.

Acting Budget Secretary Roland U. Toledo said the government remains committed to scaling up infrastructure investment over the medium term, adding that risks of project delays this year are limited after what he described as a “clean” budget process.

For 2026, the Development Budget Coordination Committee (DBCC) has scaled back its infrastructure outlay target to 4.3% of GDP, or about P1.3 trillion, from an earlier goal of 5.1% of GDP, equivalent to P1.56 trillion.

The overall government disbursement program for next year was also trimmed by 3.19% to P4.824 trillion.

Finance Secretary Frederick D. Go said public spending is expected to rebound this year, noting that authorities have worked to clear bottlenecks in the spending program.

The top five spending agencies include the DPWH and the Education, Health, Agriculture and Transportation departments, he said. — Aubrey Rose A. Inosante