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The Philippines’ trade-in-goods deficit narrowed to USD 3.95 billion in June, as double-digit export growth was driven by frontloading in the run-up to higher US tariffs, the Philippine Statistics Authority (PSA) said on Wednesday.

Preliminary data from the PSA showed the country’s balance of trade in goods — the difference between the values of exports and imports — stood at a USD 3.95-billion deficit in June, slimmer than the USD 4.34-billion gap a year earlier. It was the widest trade deficit since the USD 3.97-billion gap seen in April.

Month on month, the trade gap widened from the revised USD 3.63-billion deficit in May.

Outbound shipments of Philippine-made goods jumped by 26.1% year on year to USD 7.02 billion in June, marking the sixth straight month of annual expansion. This was also the fastest growth in exports since 28.2% in April 2024.

Month on month, exports slid by 4% from USD 7.31 billion in May. Export receipts for June were also the lowest since USD 6.78 billion in April.

On the other hand, the value of imports picked up 10.8% year on year to USD 10.98 billion in June from USD 9.9 billion in the same month a year ago.

The growth in imports was the fastest since 17.8% logged in March.

Month on month, imports inched up by 0.3% from USD 10.95 billion in May.

For the first semester, the trade deficit narrowed to USD 23.97 billion from the USD 25.06-billion deficit a year ago.

The country’s balance of trade in goods has been in the red for over a decade or since the USD 64.95-million surplus in May 2015.

In the January-to-June period, exports increased by 13.2% to USD 41.24 billion, while imports rose by 6% to USD 65.22 billion.

Pantheon Macroeconomics Chief Emerging Asia Economist Miguel Chanco said in a research note that trade was “flattered hugely by base effects in June,” as exports and imports saw a decline last year.

“The widening of the trade deficit would’ve been more pronounced if not for the still-favorable seasonal effects in play, particularly on the export side,” he said.

Frontloading

In a note, Chinabank Research said exports grew faster in June amid signs of frontloading by US importers due to uncertainty over tariffs.

US President Donald J. Trump in April announced a 17% “reciprocal tariff” on Philippine goods, but implementation was paused until July. Earlier this month, Mr. Trump set a 19% tariff on Philippine goods after a meeting with Philippine President Ferdinand R. Marcos, Jr. It will take effect on Aug. 1.

“Shipments to the US — the Philippines’ top export market — surged (+35.2%), suggesting some frontloading by US importers before higher US tariffs take effect, alongside some base effects (i.e., exports to the US fell 19.8% in June 2024),” Chinabank Research said.

In June, the United States was the top destination for Philippine-made goods at USD 1.22 billion (17.3% share). It was closely followed by Hong Kong (USD 1.065 billion or a 15.2% share), Japan (USD 974.8 million or a 13.9% share), and China (USD 733.99 million or a 10.5% share).

However, Mr. Chanco pointed out the month-on-month decline in exports in June was caused by the “broad-based pullback in demand from a number of key markets, namely, Japan (-10.1%), Hong Kong (-7.6%), and China (-1.6%).”

By major type of goods, exports of manufactured goods went up by 27.3% year on year to USD 5.53 billion in June. This made up the bulk of total outbound sales during the month.

Electronic products, which accounted for more than half of exports and 70.3% of manufactured goods, rose by 30% to USD 3.89 billion.

Semiconductors, which made up a little over 40% of exports and 74% of electronic products, climbed by 24.6% year on year to USD 2.89 billion.

“Month on month, however, semiconductor exports were flat, underscoring the sector’s fragile recovery. A risk is the potential imposition of US tariffs on currently exempt semiconductors, depending on the result of the US’ national security probe into chip imports,” Chinabank Research said.

Silver linings

Meanwhile, Mr. Chanco said there are a few silver linings in the import data, “which is a far more important health-check for the Philippines’ domestic demand driven economy.”

“Specifically, the recovery in previously subdued capital goods imports is going from strength to strength… with their continued surge in June masking a poor month for consumer goods and purchases of raw materials and intermediate goods,” he said.

PSA data showed imports of capital goods grew by 31.1% to USD 3.71 billion in June.

Chinabank Research said the surge in capital goods was “driven by a sharp rise in telecommunication equipment and electrical machinery (+30.4%), and transport-related assets such as aircraft, ships and boats (+702.4%).”

“This indicates that domestic service businesses remain optimistic even in the face of uncertainties,” it added.

Imports of raw materials and intermediate goods inched up 2.9% to USD 3.67 billion in June.

“Demand for consumer goods held firm (+13.1%), with household consumption benefiting from low and stable inflation and robust labor market conditions. The country’s pledge to slash tariffs on automobiles from the US may contribute to the increase in this category moving forward,” Chinabank Research said.

By commodity group, electronic products, which accounted for more than a fifth of total imports, went up by 14.9% to USD 2.56 billion in June.

Orders of semiconductors, which accounted for 70% of electronic products and 16.3% of total imports, rose 22.8% year on year to USD 1.79 billion in June

China remained the main source of imported products, which accounted for 28.2% of the total or USD 3.1 billion. Japan followed with a 7.9% share or USD 870.15 million and South Korea’s 7.8% share or USD 853.26 million.

Ateneo de Manila University economics professor Leonardo M. Lanzona said the trade data showed strong growth in exports to other markets which could help offset a potential slowdown in demand from the US.

“The Philippines appears to be maintaining strong growth despite trade headwinds, suggesting domestic demand and other sectors are compensating for trade challenges,” Mr. Lanzona said. “It is recommended then that we strengthen the domestic economy at least for now but make sure that this leads to greater exports later.”

The Development Budget Coordination Committee in June raised the export growth assumption for this year to 5% from 3%. It lowered the import growth assumption to 2% from 4%. — Pierce Oel A. Montalvo

Analysts are urging the Philippine government to abolish the “outdated” travel tax, but the Department of Finance (DoF) has warned this could lead to as much as PHP 5.1 billion in revenue losses.

In a statement sent to BusinessWorld, the DoF said it is reviewing Senate Bill (SB) No. 424, which seeks to remove the travel tax imposed on individuals leaving the Philippines via international flights.

“Highly preliminary (estimates show the) removal of travel tax would have cost the government around P5.1 billion in 2023,” the DoF said via Viber message on Friday.

“We will be projecting 2025 onwards and the distributional impact,” the DoF said.

Senator Alan Peter S. Cayetano, author of SB 424, has estimated PHP 4 billion in foregone revenue from the removal of the travel tax. However, he expects the government to gain around PHP 299 billion through increased tourism and spending.

The travel tax was first imposed under Republic Act No. 1478 in 1956 and later amended through Presidential Decree No. 1183, issued by then-President Ferdinand E. Marcos in 1977.

The government collects a travel tax of PHP 1,620 (USD 28.35) from economy air passengers and PHP 2,700 (USD 47.24) from first class air passengers.

Exempted from paying the travel tax are overseas Filipino workers (OFW), Filipino permanent residents abroad who stayed less than a year in the Philippines, and children aged two years and below.

“Abolishing the travel tax is a bold move, people-first move. It empowers more Filipinos to explore, spend, and stimulate the economy. We may lose roughly P4 billion in tax, but we stand to gain close to PHP 300 billion in tourism and local business growth. It’s a smart trade-off,” Reyes Tacandong & Co. Senior Adviser Jonathan L. Ravelas said in a Viber message.

Filomeno S. Sta. Ana III, coordinator of Action for Economic Reforms, said the removal of the travel tax would mean less revenues for the government that is already facing “a worrisome fiscal problem.”

“[Travelers] are willing to pay the tax. The travel tax is not a disincentive for both Filipinos and foreigners to travel to and from the Philippines. And the travel tax is not the real barrier to attracting tourists,” Mr. Sta. Ana said in a Viber message.

Mr. Sta Ana pointed out that the bigger question is how the travel taxes are being used.”

Under the law, 50% of the proceeds from the travel tax collection go to the Tourism Infrastructure and Enterprise Zone Authority (TIEZA), while 40% of the proceeds go to the Commission on Higher Education for tourism-related education programs. The remaining 10% goes to the National Commission for Culture and the Arts.

Nigel Paul C. Villarete, a senior adviser on public-private partnerships at the technical advisory group Libra Konsult, Inc., said most Filipino travelers are not aware of how the travel tax proceeds are used.

“The government must find ways to fund the same. Or we tax the airlines directly since they will still get it from the ticket sales. There are many ways of doing that (instead of collecting it from air travelers),” Mr. Villarete said.

Analysts said the removal of the travel tax would make international flights more affordable for Filipinos and boost tourism activity.

John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies, said removing the travel tax would lower the cost of international travel for Filipinos.

“The P5.1-billion revenue loss from abolishing the travel tax is relatively small in the broader fiscal picture, but it funds important programs in education, tourism, and culture,” Mr. Rivera via Viber message said.

Raymond “Mon” Abrea, chairman and chief executive officer of the Asian Consulting Group, said the removal of the travel tax is long overdue as it discourages tourism and regional mobility.

“The Philippines remains the only ASEAN (Association of Southeast Asian Nations) country that still imposes this outdated tax on outbound travelers,” Mr. Abrea told BusinessWorld in a Viber message at the weekend.

He noted that while OFWs are exempt, the travel tax disproportionately affects ordinary residents, particularly those flying economy.

“We can’t promote tourism while charging people to leave the country. It’s time to align with our ASEAN neighbors and put the people’s mobility — and the economy — first,” Mr. Abrea said.

He said TIEZA collected P7.8 billion from its share of the travel tax last year, but this can be subsidized by the general fund.

Mr. Rivera said the government should ensure there is a sustainable alternative to funding tourism investments.

“But until then, a full repeal may be premature. A more targeted reform like exempting OFWs, students, or low-income travelers might be a more balanced approach,” he said.

Eleanor L. Roque, tax principal of P&A Grant Thornton, also backed the removal of the travel tax, citing its high cost and inconvenience for passengers.

“The government has been collecting travel tax since 2009 when it was approved but we have not seen any substantial improvement in tourism because of it,” she said in a Viber message.

Air passengers can pay the travel tax at airport payment counters, the TIEZA website and authorized travel agencies. Travelers can also opt to include payment of the travel tax when buying their airline tickets.

“Abolishing the travel tax would encourage more Filipinos to travel abroad and thus benefit that segment of the aviation sector catering to international travel,” Rene S. Santiago, former president of the Transportation Science Society of the Philippines, said in a Viber message to BusinessWorld.

Under Mr. Cayetano’s bill, nationals from ASEAN member states are also exempted from the travel tax.

This would also align the Philippines with its commitments under the ASEAN Tourism Agreement of 2002, which calls for the gradual elimination of travel levies among member countries to promote regional mobility and tourism integration.

Mr. Marcos last year granted travel tax exemptions to all travelers departing from international airports and seaports in Mindanao and Palawan to any destination in the Brunei Darussalam-Indonesia-Malaysia-Philippines-East ASEAN Growth Area. The tax exemption will be in place until June 30, 2028. — Aubrey Rose A. Inosante, Reporter with inputs from Ashley Erika O. Jose

The  Bangko Sentral ng Pilipinas (BSP) could continue lowering interest rates at its meeting in August, its top official said.

BSP Governor Eli M. Remolona, Jr. told reporters on Tuesday that a rate cut is still “on the table” at the Monetary Board’s next policy review on Aug. 28.

If realized, this would mark the third straight rate cut delivered by the Philippine central bank.

The BSP has so far reduced borrowing costs by a total of 125 basis points since it began its easing cycle in August last year.

Key data releases such as the second-quarter gross domestic product (GDP) will be available by the next policy meeting, Mr. Remolona noted.

He said he expects GDP to have expanded by “around 5.5%” in the second quarter, which would be slightly faster than the 5.4% GDP growth in the first quarter.

The Philippine Statistics Authority is set to release second-quarter GDP data on Aug. 7.

The government is targeting a 5.5-6.5% growth this year.

The BSP can also continue easing rates even after the US starts imposing a 19% tariff on goods from the Philippines starting Aug. 1.

Mr. Remolona said the impact of the tariffs on the Philippine economy will be “modest.”

“Globally it’s much clearer now than before. Our issue is more the global spillover effects than the direct effect,” he said.

“A lot of sectors are exempt. We’re not a big trading economy so that limits the impact on us.”

The Philippines’ new US tariff rate is now the same as Indonesia, and slightly lower than Vietnam’s 20%. 

Meanwhile, the BSP chief said he is keeping his outlook for two more rate cuts this year.

After August, the Monetary Board has two remaining meetings scheduled for October and December.

Asked if there was a possibility for a third rate cut, Mr. Remolona said it would take “something very unusual” to warrant this scenario.

A drastic slowdown in growth was also “very unlikely,” he added.

“Growth has to slow down dramatically… it will depend on not just the quarterly growth but the prospects.”

Meanwhile, Mr. Remolona said they are still comfortable with the peso at the P57 level.

“That’s still quite strong,” he said in mixed Filipino and English.

The peso closed at PHP 57.31 per dollar on Tuesday, depreciating by 11 centavos from its PHP 57.20 finish on Monday. This was its weakest close in more than a month or since its PHP 57.58 close on June 23.

“As you know, we don’t have a target for the peso. I’m more concerned about the potential inflationary effects.” — Luisa Maria Jacinta C. Jocson,  Senior Reporter

The International Monetary Fund (IMF) raised its gross domestic product (GDP) growth forecast for the Philippines for 2026 but kept its projection for this year amid heightened global uncertainty.

In its latest World Economic Outlook (WEO), the IMF upwardly revised its 2026 Philippine growth forecast to 5.9% from 5.8% previously. However, this would be below the government’s 6-7% GDP growth target for next year.

The IMF’s Philippine economic growth projection for 2026 is higher than Indonesia (4.8%), Malaysia (4%), and Thailand (1.7%).

At the same time, the IMF maintained its GDP growth forecast for the Philippines at 5.5% this year, the same as its estimate in April. This would fall at the low end of the government’s 5.5-6.5% target range for 2025.

The IMF projects the Philippines’ GDP growth this year to outpace that of Indonesia (4.8%), Malaysia (4.5%), and Thailand (2%).

“Since the April 2025 WEO, uncertainty has remained elevated even as effective tariff rates have come down,” the IMF said in its report.

US President Donald J. Trump announced a 19% tariff on Philippine goods, following a meeting with President Ferdinand R. Marcos, Jr. last week. The new rate will take effect on Aug. 1

At the time the April WEO came out, the Philippines was slapped with a 17% tariff in Mr. Trump’s initial round of “Liberation Day” tariffs.

The IMF noted that the staff projections in the July update are “based on real-time current trade policy.”

IMF Chief Economist Pierre-Olivier Gourinchas in a speech at the report launch said that the US has “partly reversed course, pausing the higher tariffs for most of its trading partners.”

“Despite these welcome developments, tariffs remain historically high, and global policy remains highly uncertain, with only a few countries having reached fully fleshed out trade agreements,” he said.

“This modest decline in trade tensions, however fragile, has contributed to the resilience of the global economy so far.”

The IMF anticipates global growth at 3% for 2025 and 3.1% for 2026, both higher than its 2.8% and 3% projections in April.

“This resilience is welcome, but it is also tenuous. While the trade shock could turn out to be less severe than initially feared, it is still sizeable, and evidence is mounting that it is hurting the global economy,” Mr. Gourinchas said.

Mr. Gourinchas also warned that risks to the global economy “remain firmly to the downside” as the current trade environment remains “precarious.”

“Tariffs could well reset at much higher levels once the ‘pause’ expires on Aug. 1 or if existing deals unravel. If this were the case, model-based simulations suggest global output would be 0.3% lower in 2026,” he said.

Ongoing trade uncertainty would weigh on investment and activity without comprehensive agreements, he added.

“The geopolitical environment also remains fragile, with a potential for more negative supply disruptions.”

The IMF also flagged high public debt and deficits, which make economies vulnerable to financial shocks.

“The lack of fiscal space makes these countries especially vulnerable to a sudden tightening in financial conditions that increase term premia.”

“Such tightening becomes even more likely if central bank independence — a cornerstone of macroeconomic, monetary and financial stability — is undermined.”

Mr. Gourinchas said that vital policy recommendations include restoring stability in trade policy; preserving central bank independence; restoring fiscal space and efforts towards long-term productivity.

Meanwhile, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the IMF may have maintained its 2025 growth projection due to expectations of the possible global economic slowdown stemming from the US tariffs.

“Though the local economy is relatively resilient and less affected amid relatively lower goods exports at around three to five times smaller compared to other major ASEAN (Association of Southeast Asian Nations) countries that are more export-dependent,” he said.

“Local economic growth would also be spurred by expansionary fiscal policy through deficit spending in view of wider budget deficits by the National Government, particularly the wider targets, provided by fiscal space available,” he added. — Luisa Maria Jacinta C. Jocson

The Philippine government is anticipating up to PHP 6 billion in foregone revenues following its decision to grant zero tariffs on selected US products imported into the country.

“Our initial estimate is something like PHP 3 billion to PHP 6 billion. It depends if everything is included,” Finance Secretary Ralph G. Recto told reporters on the sidelines of the Post-State of the Nation Address (SONA) briefing on Tuesday.

While there is no final deal yet, Mr. Recto said the foregone revenue estimate assumes that the Philippines will grant zero tariffs on select products such as automobiles, wheat, soy and pharmaceuticals.

US President Donald J. Trump announced a 19% tariff rate for goods from the Philippines after a meeting with President Ferdinand R. Marcos, Jr. in Washington. This was a slightly lower rate than the 20% that Mr. Trump threatened to impose, but higher than the 17% “reciprocal tariff” announced in April.

“We concluded our trade deal, whereby the Philippines is going open market with the United States, and zero tariffs,” Mr. Trump said.

Mr. Recto said zero tariffs on US wheat and pharmaceuticals would translate to lower prices for consumers.

“Ayaw ba natin ng murang pandesal? Walang tariff sa wheat. Pabor sa atin ’yun (Don’t we want cheaper pandesal? There’s no tariff on wheat. That’s favorable for us),” he said.

At the same time, Mr. Recto acknowledged that the Philippines’ exports to the US would be affected “initially” as a result of the 19% tariff.

“We have one of the lowest tariffs in the world… As a whole, we have a better deal than many other countries,” he said.

The Philippines’ new US tariff rate is now the same as Indonesia, and slightly lower than Vietnam’s 20%.

However, Mr. Trump said on Monday most trading partners that do not negotiate separate trade deals would soon face tariffs of 15% to 20% on their exports to the United States, well above the broad 10% tariff he imposed in April, Reuters reported.

Analysts said the foregone revenues from slashing tariffs on some US goods are “minimal.”

“Yes, the P3-billion to P6-billion revenue loss sounds minimal in the grand scheme, but it’s not just about numbers — it’s about positioning. The deal opens the door to cheaper US goods like medicine, feeds (soyabeans and wheat) and cars, which helps consumers and could ease inflation,” Jonathan L. Ravelas, a senior adviser at Reyes Tacandong & Co. said in a Viber message.

Mr. Ravelas said the government has to monitor if local industries “get squeezed” as a result of the deal.

“Bottom line: it’s favorable for now, but we must stay agile and protect domestic competitiveness,” he said.

Union Bank Chief Economist Ruben Carlo O. Asuncion said the foregone revenue is a “manageable trade-off,” noting the deal’s long-term benefits in investment, defense, and technology cooperation.

“More importantly, the deal preserves access for Philippine exporters to a key market and opens doors for deeper cooperation in investment, defense, and technology — contributing to the country’s long-term growth and resilience,” he said in a Viber message.

John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies, said the key is to ensure the gains from improved market access translates to more jobs and export growth which would offset the foregone revenue.

“If this concession helped lower the tariff on our goods and safeguard export competitiveness, albeit within limited bargaining power, especially in key sectors like electronics and garments, then the trade-off can be deemed acceptable on such ground,” he said in a Viber message.

Meanwhile, Jose Enrique A. Africa, executive director at IBON Foundation, said the reduction in tariff revenues would slash public funds for essential services.

“We still don’t even know the full extent of what deal President Marcos Jr. struck with the US, and the government is being opaque about any other economic, political or military concessions it might have given,” he said.

“But if the grossly one-sided tariff deal is any indication, the ambiguity could very well be hiding something even worse. Which could be the reason for the deal’s conspicuous omission from the President’s SONA.”

IBON Foundation had earlier estimated foregone revenues to reach PHP 3.97 billion as a result from the zero-tariff treatment on some US goods. — Aubrey Rose A. Inosante, Reporter

Philippine President Ferdinand R. Marcos, Jr. delivered his fourth State of the Nation Address (SONA) on Monday, notably omitting two controversial issues facing his administration: the proposed ban on online gambling and US tariff increases that threaten growth.

While the President spoke at length about economic growth, food security, energy reforms, and social services, he was silent on legislation seeking to outlaw or better regulate e-gaming.

The omission comes despite mounting concerns over e-gambling’s mounting toll on Filipino families with members grappling with addiction, and separate pending bills in the Senate and House of Representatives that seek to either ban or regulate the industry.

Mr. Marcos is facing growing public frustration as many Filipinos say the promises he made during his 2022 campaign remain largely unmet three years into his term.

He ran on a platform of economic revival, vowing to lower rice prices, strengthen agriculture and spark a new wave of industrialization. But for some Filipinos, those pledges have yet to translate into real improvements in daily life.

Mr. Marcos also made no mention of the 19% US tariffs on Philippine goods that will take effect on Aug. 1. Critics say the tariff increases disproportionately hurt low-income consumers already grappling with inflation, a concern that remains unaddressed in the administration’s economic narrative.

“Based on data, our economy is looking good,” the President said in his speech in Filipino that lasted an hour and 10 minutes, citing lower inflation and higher investor confidence.

But he acknowledged that these gains are meaningless “if our fellowmen struggle and are burdened.”

“The President’s SONA stumbled from the very start with the false premise of the economy doing well,” Jose Enrique A. Africa, executive director of IBON Foundation, said in a Viber message.

“This is in denial of slowing growth, high prices today after high inflation in his first three years, deficits and debt far above targets upon taking office, and jobs figures hiding worsening pay and quality of work,” he added.

The omission of legislative priorities is troubling and signals disinterest in growing poverty, hunger and joblessness, he added.

Philippine Chamber of Commerce and Industry Chairman George T. Barcelon said failure to act decisively on online gambling could lead to broader public safety concerns. “The government just has to be vigilant because normally when it comes to gambling, you attract the wrong kind of lawlessness,” he said by telephone.

“The SONA was a direct response to the midterms,” Ederson DT. Tapia, a political science professor at the University of Makati, said in a Facebook Messenger chat. “Most of the issues covered were those that mattered to the least, lost and last. He avoided topics that can be divisive too.”

The President reiterated his commitment to job creation, small business support and agriculture. He said the administration had proven that rice could be sold at PHP 20 per kilo without hurting farmers, citing limited rollouts in select areas.

He vowed to expand the program nationwide through more so-called Kadiwa stores.

Despite the upbeat tone, some analysts found the speech lacking in urgency. There was no reference to more aggressive measures to protect consumers from price shocks due to tariffs.

“We commend the President for pushing his campaign promise of P20 per kilo of rice,” Jayson H. Cainglet, executive director of the Samahang Industriya ng Agrikultura, said in a Viber message.

‘Not just lip service’

He blamed the “self-inflicted disaster that is Executive Order No. 62,” which lowered rice import tariffs to 15%, as the principal culprit for the unprecedented drop in rough rice farmgate prices, noting that the landed cost of rice imports is now only PHP 23 to PHP 25 per kilo.

Mr. Cainglet said the government should raise the rough rice procurement budget to P50 billion and quickly grant cash incentives to rice farmers using the P4-billion excess funds under the Rice Competitiveness Enhancement Fund from last year.

Philippine Exporters Confederation, Inc. President Sergio R. Ortiz-Luis, Jr. said he was “happy” that Mr. Marcos mentioned initiatives to help small and medium enterprises including increased funding. “I hope that this is not just lip service,” he told BusinessWorld by telephone.

But he was hoping that the President would say something about exports. “Unfortunately, I think it wasn’t there. I’m not sure also if he mentioned anything about the tariffs.” 

Mr. Marcos also touted gains in renewable energy, education, digitalization and healthcare. He announced efforts to expand electrification, free dialysis treatment and digital learning tools for public school teachers and students.

“Compared with last year, his speech did not have that ‘wow’ moment when he would surprise or put the crowd in awe,” Arjan P. Aguirre, assistant professor of political science at the Ateneo de Manila University, said via Messenger chat. “No strong takes on the pressing issues of the day.”

“The closest that we can highlight here is the mention of the flood control project, which still did not sound convincing since everything would still depend on him — no mention of institutionalizing changes like mechanisms and safeguards in the process itself,” he added.

In his speech, the President ordered the Department of Public Works and Highways (DPWH) to investigate flood control projects that failed during recent storms, calling out widespread corruption in infrastructure spending and warning of criminal charges for those found guilty.

He cited his recent inspections after the onslaught of the southwest monsoon and tropical cyclones Crising, Dante, and Emong, which exposed the collapse and dysfunction of flood mitigation systems across the country.

“I saw firsthand that many flood control projects were poorly built, collapsed, or worse — never even existed,” the President said in Filipino. “Let’s stop pretending. The public knows there was racketeering in these projects.”

Mr. Marcos accused unnamed officials and contractors of pocketing public funds through “kickbacks, initiatives, errata, SOPs (standard operating procedures), for the boys,” and called out their lack of shame.

“You should be ashamed of yourselves in front of your fellow Filipinos… especially for what you’ve done to the families whose homes were swept away or submerged in floodwaters,” he said. “You should be even more ashamed for burdening our children with debt from money you simply stole.”

To address the issue, he said the DPWH must immediately submit a list of all flood control projects launched or completed in the past three years across all regions.

Second, regional project monitoring committees will review the list to identify incomplete, substandard or ghost projects.

“We will publish this list,” Mr. Marcos said. “The public, as witnesses to these projects, will be free to review them and share what they know to help with the investigation.”

He added that an audit and performance review would accompany the probe to trace how public funds were used. “In the coming months, everyone found guilty in this investigation — along with their contractor accomplices — will face charges.”

“The people deserve to know the full truth. There must be accountability for the damage and corruption,” he said.

In a further warning to lawmakers, Mr. Marcos declared he would not approve any 2026 national budget that deviates from his government’s national expenditure program.

“I will return any proposed general appropriations bill that is not fully aligned with the national expenditure program,” he said. “I’m willing to do this even if we end up with a reenacted budget.”

“I will not approve any budget that is not aligned with the government’s plans for the Filipino people,” he added.

Leonardo A. Lanzona, an economics professor at the Ateneo de Manila University, said a reenacted budget “would never happen” given all the promises Mr. Marcos made.

“This is a contradiction,” he said in a Messenger chat. “Without any accomplishments, the President has promised to bribe us with candies to get our approval and distract us from the problems, including the high tariffs we are facing.”

The President’s remarks marked one of the strongest condemnations of government corruption in his term so far, signaling a tougher stance ahead of the 2026 budget season.

But the absence of any statement on pressing regulatory issues raised questions about the administration’s priorities. With three years left in his term, analysts and lawmakers alike are watching to see whether the President will confront these concerns head-on — or continue to sidestep them.

Mr. Barcelon said the President deserves credit for addressing inefficiencies in public works spending, and welcomed his remarks on healthcare, education, and support for farmers, calling them “all good.”

But the government’s “very high” debt is concerning, he said by telephone. “And that is something that can only be resolved if our economy would be fast-tracked from 5-6%, probably to 7-8%.”

He warned that without faster growth, the country’s rising debt burden, which stood at P16.92 trillion as of May, could derail the President’s social pledges.

“This issue of incurring such a huge debt would continue. And that might make all his promises to the people on free education, free health — everything is almost free — very challenging.”

Mr. Barcelon also expressed surprise that Mr. Marcos made no mention of the country’s trade policy with the US, calling it a missed opportunity to clarify the direction of one of the Philippines’ most important economic partnerships.

He described the overall tone of the speech as “a pep talk for the people to hear,” and reiterated that the private sector remains committed to supporting the government. — Norman P. Aquino, Special Reports Editor with Chloe Mari A. Hufana, Justine Irish D. Tabile, Kenneth Christiane L. Basilio and Adrian H. Halili