Infrastructure spending rebounds in June

State spending on infrastructure bounced back in June, as disbursements for public works projects resumed after the election ban was lifted in early May, the Department of Budget and Management (DBM) said.

In its latest disbursement report on Thursday, the DBM reported that expenditure on infrastructure and other capital outlays increased by 6.5% to PHP 148.8 billion in June from PHP 139.7 billion in the same month last year.

Month on month, it increased by 20.2% from PHP 123.8 billion.

This came after the month of May saw an annual 9.2% decline.

“This was largely attributed to the recovery of DPWH’s (Department of Public Works and Highways) spending performance following a two-month decline in April and May amid the election ban,” it said.

The Commission on Elections’ 45-day ban on public works spending started on March 28 and ended with the May 12 elections.

In June, the DPWH resumed payments for mobilization fees as well as made progress payments for newly awarded projects. It also settled outstanding obligations from previous years.

However, the DBM noted the pace of infrastructure spending was tempered by base effects from substantial releases for the Department of National Defense’s Revised Armed Forces of the Philippines Modernization Program in June last year.

The Philippines has been ramping up its military capacity under the USD 35-billion military modernization program since 2012 in response to rising tensions in the South China Sea.

The DBM said big-ticket releases for infrastructure are expected in the second half of the year.

Budget Secretary Amenah F. Pangandaman earlier explained that disbursements are expected to pick up toward the latter part of May to June after the 45-day election ban is lifted.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said that increased infrastructure spending is crucial for economic growth.

“(This will translate to) more inclusive economic growth and development, as better infrastructure boosts the economy’s productivity, as well as help attract more foreign tourists and more foreign investments/locators,” Mr. Ricafort said in a Viber message on Thursday.

For the first half of 2025, overall infrastructure and capital outlays disbursements inched up by 1.4% to PHP 620.2 billion from P611.8 billion in the same period last year.

This was 0.1% or PHP 800 million below the PHP 621-billion program for the first semester.

“Although infrastructure expenditures posted a notable 20.8% (PHP 45-billion) annual growth in first quarter this year, it contracted by 9.3% (PHP 36.6 billion) in second quarter amid the election-related prohibition on public spending covering the entire month of April up to the first two weeks of May,” the DBM said.

Meanwhile, overall infrastructure disbursements, which include infrastructure components of subsidy or equity to government corporations and transfers to local government units, were flat at PHP 720.3 billion in the January-to-June period from PHP 720.5 billion a year ago.

It also exceeded the overall infrastructure spending program of PHP 718-billion for the first half by 0.3%.

The DBM said growth in infrastructure transfers to local government units, particularly their development fund equivalent to 20% of the National Tax Allotment, was offset by lower National Government-implemented infrastructure activities and reduced subsidies to state agencies like the National Irrigation Administration (NIA).

Subsidies provided to state-run firms stood at PHP 7.45 billion in June, 26.68% down from PHP 10.16 billion a year earlier.

Budgetary support to the NIA plunged by 68.21% in June to PHP 2.39 billion from PHP 7.52 billion in the same period in 2024.

“Nevertheless, the total infrastructure spending for the first semester was registered at 5.3% of GDP (gross domestic product), in line with the 5.3% full-year target for this year,” it added.

Based on the 2026 Budget of Expenditures and Sources, the government set its full-year infrastructure spending program at PHP 1.51 trillion, equivalent to 5.3% of the GDP.

In the following months, the DBM said line agencies are expected to ramp up requests for release of allotments for their programs, activities, and projects in the second semester as implementation activities normalize post-election ban.

“These may also include unutilized cash allocations from the second quarter that line agencies can still request this second semester so they can process payments and make disbursements to suppliers or contractors for completed and delivered goods or rendered services,” it said.

Among the anticipated spending drivers for the succeeding months are progress billings from multiple finished or partially completed road and transport infrastructure projects and releases for defense modernization program.

“Increased infrastructure spending at around 5%-6% of GDP for the coming years, as also seen in recent years, would still lead to sustained growth in infrastructure spending,” Mr. Ricafort said. — Aubrey Rose A. Inosante