Infrastructure spending slumps in December

INFRASTRUCTURE SPENDING slumped by an annual 28% in December as tighter controls remained in place amid the corruption scandal, the Department of Budget and Management (DBM) said.

Latest data from the DBM showed that spending on infrastructure and other capital outlays fell by 27.9%, or P40.9 billion, to P105.8 billion in December 2025 from P146.7 billion in the same month in 2024.

Month on month, infrastructure spending surged by 120.3% from P48 billion in November.

The DBM attributed the annual decline to the “delays and slowdown in payments caused by tighter controls in the wake of flood control corruption issues.” It also cited adverse weather conditions that affected the implementation of some projects of the Department of Public Works and Highways (DPWH).

Infrastructure spending fell for a sixth consecutive month in December, a decline that began in July after President Ferdinand R. Marcos, Jr. first flagged anomalous flood control projects.

However, the DBM said that the decrease was tempered by the Department of National Defense’s disbursements for its revised Armed Forces of the Philippines Modernization Program, as well as payments made for building construction.

“Similarly, direct payments made by development partners for foreign-assisted projects… helped temper the decline in capital expenditures,” it added.

These projects include the Manggahan Floodway Bridges Construction Project and the Laguna Lakeshore Road Network of the DPWH and the North-South Commuter Railway Project of the Department of Transportation (DoTr).

Ateneo Center for Economic Research and Development Director Ser Percival K. Peña-Reyes said that the decline in infrastructure spending is “part of a broader pattern seen in late 2025.”

“Multiple DBM reports and related coverage point to a combination of governance issues, administrative delays, and policy adjustments as the main causes,” he told BusinessWorld via Facebook Messenger.

“This decline is largely a policy-driven, temporary slowdown, not a permanent cut in infrastructure priorities,” he added.

Mr. Peña-Reyes said a rebound in infrastructure spending will depend on how quickly governance reforms restore confidence and speed up project approvals.

“So, the rebound may be uneven throughout the year,” he added.

FULL-YEAR PERIOD
Data from DBM showed overall infrastructure and capital outlay disbursements declined by 17.3% to P1.1 trillion in 2025 from P1.33 trillion a year ago. This was 18.8% short of the P1.35-trillion program for the year.

DBM said that the decline in the full-year infrastructure spending reflects the spending slump in the second half amid the probe on anomalous flood control projects.

In the fourth quarter alone, disbursements dropped by 36.2% to P219.8 billion from P344.3 billion in the same period in 2024. This was P127.3 billion lower than the P347.1‑billion program for the October-to-December period.

Meanwhile, overall infrastructure disbursements slid by 15.1% to P1.35 trillion in the end-December period from P1.59 trillion in 2024.

This includes infrastructure components of subsidy and equity to government corporations and transfers to local government units.

The Budget department said that the decline in infrastructure spending was among the reasons for the slower economic expansion in 2025.

The economy grew by 4.4% in 2025, a post-pandemic low and well below the government’s 5.5%-6.5% target.

“The slower performance was attributed to several converging factors, including severe weather conditions and climate-related disruptions, persistent global economic uncertainties largely driven by protectionist trade policies and weaker demand from advanced economies, as well as the flood control corruption issues, which weighed on business and consumer confidence,” the DBM said.

John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies, attributed the decline in infrastructure spending to delays in implementation rather than a lack of funding.

“This suggests a timing issue, so spending could rebound once these are resolved,” he said in a Viber message.

“However, if delays persist, there is a risk of spillover into 2026, which could weigh on growth given the importance of infrastructure to economic activity,” he added.

OUTLOOK
Meanwhile, the DBM said that it expects muted spending in the first half of 2026.

“Spending growth for the first semester of 2026 is expected to be tempered given the base effect of sizable capital outlays in the same period last year due to the settlement of accounts payables and the frontloading of some expenditures ahead of the election ban,” it said.

The DBM said it expects disbursements to be mainly driven by “human capital development and agriculture expenditures, particularly under the education, health, and social services sectors, given their higher budgets this year.”

The Philippine government approved a P6.79-trillion national budget for 2026, 7.4% higher than the P6.326 trillion in 2025.

Programs to help cushion the impact of the Middle East conflict will also help lift spending this year, the Budget department said.

These programs include the fuel subsidies of the DoTr and the Department of Agriculture, as well as the release of P20 billion to the Department of Energy for the procurement of fuel products to augment the country’s supply.

“Meanwhile, efforts are also being undertaken to strengthen infrastructure spending this year, with particular focus on the completion of flagship foreign-assisted projects,” it said.

The DBM recently released P44.2 billion to fast-track the implementation of the Metro Manila Subway Project Phase I and the North-South Commuter Railway System. — Justine Irish D. Tabile