Government infrastructure spending plunged 43.5 percent in the first quarter of 2026, contracting to ₱147.8 billion from ₱261.8 billion a year earlier, official data show, a dramatic decline largely attributed to tighter oversight after a major corruption scandal.
The Department of Budget and Management (DBM) said the drop reflects the Department of Public Works and Highways’ (DPWH) weaker disbursement performance as the agency completes lingering 2025 projects and implements stricter validation of billing claims. March alone saw infrastructure outlays fall 48 percent year-on-year to ₱59.1 billion.
The spending slump traces to a mid-2025 probe that exposed hundreds of fraudulent flood-control projects. Inspections ordered by DPWH Secretary Vince Dizon found what investigators called “ghost” projects, and a Senate inquiry later identified at least 673 fully paid but non-existent flood-control works, with alleged losses of roughly ₱180 billion. Dizon has filed graft and malversation charges against dozens of officials and contractors involved.
Economic impact
The pullback in capital spending has had measurable effects on the broader economy. Philippine GDP growth slowed to 2.8 percent in Q1 2026, down from 5.4 percent in the same quarter last year, as delayed public works and weaker business confidence weighed on activity. Despite the hit to infrastructure, overall government disbursements rose 3.2 percent to ₱1.49 trillion in the quarter, supported by higher transfers to local governments and wage spending.
Signs of recovery
Budget officials say the worst of the slowdown may be easing. In April, the DBM approved the release of ₱46.22 billion to finance 1,743 infrastructure projects nationwide. Economic managers have set a revised full-year infrastructure target of ₱1.3 trillion, equivalent to about 4.3 percent of GDP, well below the DPWH’s initial Q1 target range of ₱200 billion to ₱250 billion.
The administration now faces a test: accelerate disbursements enough to meet even the reduced annual targets without weakening the anti-corruption safeguards that triggered the slowdown. How quickly the DPWH and DBM can clear validated claims and resume project rollouts will shape growth prospects and public confidence in the months ahead.
0 Comments