Philippine infrastructure spending slumps in September

Philippine infrastructure spending fell for a third straight month in September, as public works projects continued to undergo tight scrutiny amid a corruption scandal, the Department of Budget and Management (DBM) said.

In its latest disbursement report on Sunday, the DBM said expenditures on infrastructure and other capital outlays declined by 42.6% to PHP 78.7 billion in September from PHP 137.1 billion in the same month last year.

Month on month, it slipped by 7.2% from PHP 84.9 billion in August. This marked the third consecutive decline in infrastructure spending since the 31.6% contraction in July.

“The spending performance of the Department of Public Works and Highways (DPWH) continued to register negative growth rate for the third straight month since July 2025,” the DBM said.

President Ferdinand R. Marcos, Jr. had flagged anomalous flood control projects during his State of the Nation Address in late July. This sparked several investigations into alleged corruption involving lawmakers, government officials, and private contractors.

The DBM attributed the sharp drop in infrastructure spending in September to the delays or non-submission of billings by contractors as the DPWH offices reviewed the implementation and completion of projects around the country. This affected the processing of payment claims and actual disbursements by the DPWH, it added.

“Heightened scrutiny from oversight agencies, such as the Office of the Ombudsman, the Commission on Audit, the Bureau of Internal Revenue, and the Department of Budget and Management, (which) resulted in more conservative and cautious processing of payment claims,” it said.

The DBM said there was also a freeze order on some bank accounts of DPWH implementing offices, which were under investigation.

Bad weather in September also hampered the implementation of projects, it added.

“Nevertheless, payments for the local counterpart of foreign-assisted projects of the Department of Transportation and the RAFPMP (Revised Armed Forces of the Philippines Modernization Program) of the DND (Department of National Defense) partially tempered the decline in infrastructure disbursements,” the Budget department said.

Reinielle Matt M. Erece, an economist at Oikonomia Advisory and Research, Inc., said in a Viber message that “tighter ropes on public spending” may have contributed to the drop in infrastructure spending in September.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort attributed the sharp year-on-year decline in infrastructure spending to the government’s implementation of anti-corruption measures amid the anomalous flood control projects.

“Some of the funding for which (were) redeployed to other social spending such as for the Department of Social Welfare and Development (DSWD), Department of Agriculture among others,” he said in a Viber message.

Mr. Ricafort also noted weather-related disruptions, such as typhoons and earthquakes, reduced the number of business days in September.

Nine-month period

For the January-to-September period, the overall infrastructure and capital outlay disbursements stood at PHP 877.1 billion, down 10.7% from PHP 982.4 billion a year ago. This accounted for 87.4% of the PHP 1.0036‑trillion full‑year program.

“(This) was largely due to the lower spending performance of the DPWH. This followed the stricter validation of the status of implementation, quality, and completion of infrastructure projects nationwide amid corruption issues,” the DBM said.

In the third quarter alone, disbursements fell by 30.7% to PHP 256.9 billion from PHP 370.6 billion in the same period in 2024. This was PHP 125.7 billion lower than the PHP 382.6‑billion program for the July-to-September period.

Data from the DBM showed overall infrastructure disbursements, which include infrastructure components of subsidy and equity to government corporations and transfers to local government units, slipped by 8.6% to PHP 1.04 trillion in the end-September period from PHP 1.14 billion a year ago.

The Budget department said the drop in DPWH disbursements shaved off 1.3 percentage points in the third‑quarter 2025 gross domestic product (GDP) growth.

The Philippine economy grew by 4% in the third quarter, the slowest growth seen in over four years or since the first quarter of 2021.

This brought the nine-month tally to 5%, falling short of the government’s 5.5% to 6.5% target.

Economic managers have insisted the spending slump will likely be temporary as reforms and investigations are underway.

However, analysts have warned the drag on economic growth could persist until 2026 unless the government pushes for governance reforms and those behind anomalous flood mitigation projects are jailed.

Mr. Erece said spending may remain subdued in the near future.

“It is difficult to say whether an improvement can be expected next year given the decline in public trust and slow approval of next year’s budget as they closely scrutinize every allocation, especially on infrastructure,” he said.

During plenary debates on the 2026 budget, Senator Sherwin T. Gatchalian said infrastructure spending is expected to reach just 4.7% of GDP in 2026, down from the government’s 5.1% target amid a corruption probe.

Mr. Ricafort said the recovery in infrastructure spending would depend on governance reforms.

“Kung walang risk of corruption, tuloy ang infrastructure spending (If there is no risk of corruption, infrastructure spending will continue),” he said.

Meanwhile, the DBM said capital outlays are expected to partly normalize toward yearend as most public works resume.

“Capital expenditures are expected to partly normalize towards the end of the year with the implementation of most public works by the DPWH will resume before the year ends as governance measures and safeguards against corruption are put in place,” it said.

DPWH Secretary Vivencio “Vince” B. Dizon lifted on Sept. 16 the suspension of procurement for locally funded civil works, as the agency laid out stricter compliance rules.

These include livestreaming of bidding, geotagging of projects, and conduct of road and bridge information application validation.

Other measures cover encoding and verification of project data in the Project and Contract Management Application and Civil Works Application, a ban on contract splitting, and tighter reviews of bidders’ financial capacity under procurement law.

The DBM earlier said the government is banking on the release of PHP 1.307 trillion in programmed spending in the fourth quarter to boost growth, with most funds earmarked for social services. — Aubrey Rose A. Inosante