By Aubrey Rose A. innocente, reporter
government is spending less Third quarter, mainly due to corruption CrackThis curbed public distributionIdea, There is a possibility of temporary impact on the economy Development this year, Finance Secretary Ralph G. Recto said.
“This (lower spending in the third quarter) is expected to temporarily impact government final consumption expenditure and overall GDP growth,” he said. businessworld In a Viber message on October 31.
Treasury Bureau data shows the Marcos administration distributed only P1.46 trillion in the third quarter, P141.73 billion less than its P1.6-trillion program for the period. This is mainly due to low spending by the Public Works and Highways Department, which is at the center of a corruption scandal involving flood control projects.
“Nevertheless, the government’s prompt and decisive action following the recent flood control controversy marks the beginning of a major government cleanup that will lead to stronger institutions, better governance and faster growth in the medium term,” Mr. Recto said.
President Ferdinand R. Marcos, Jr. flagged off unusual flood control projects during his state of the nation address in late July. This led to several investigations into alleged corruption involving lawmakers and the government.Fofficials, and private contractors.
“The controversy has also shown that not all capital expenditure translates into growth. And now that we are closing those leaks and reallocating funds to high-impact investments such as education, healthcare, agriculture and digitalisation – we will only grow faster,” Mr Recto said.
As of end-September, the national government has released P4.48 trillion, equivalent to 73.72% of its P6.08-trillion full-year disbursement program for 2025.
Economic managers, including Mr. Recto, had previously warned that gross domestic product (GDP) growth was likely to moderate in the third quarter. The government is targeting 5.5-6.5% GDP growth this year.
OfFPreliminary GDP data will be released by the Philippine Statistics Authority on November 7.
Mr Recto also pledged that “catch-up measures” were underway to keep spending on track and boost growth.
He said, “Although there has been a slowdown in government spending as we continue to address the flood control corruption controversy, it reflects the administration's commitment to spending only on legitimate programs and projects.”
He said “short-term adjustments” would pave the way for greater impactFBetter and transparent public expenditure in future.
“After identifying and weeding out odd projects, we are ensuring that taxpayers' money goes to genuine initiatives, eliminate waste and only pay for the true cost of government programmes,” Mr Recto said, adding that the President has directed government agencies to cut costs by 50%.
Economy Secretary Arsenio M. Balisacan and Budget Secretary and Development Budget Coordinating Committee Chairwoman Amena F. Pangandaman had earlier said that the 5.5% to 6.5% GDP growth target was achievable.
However, some economists have lowered their growth forecasts for the Philippines, citing corruption investigations that have dampened investor sentiment.
Last week, Nomura Global Markets Research cut its 2025 growth forecast for the Philippines to 4.7% from 5.3%, taking into account rising downside risks from a corruption scandal involving flood control projects.
Asked for comment, Mr. Recto said Nomura's downgrading was “highly conservative.”
“Reaching 4.7% GDP for 2025 means the economy will grow only 4% in the second half of the year. This does not account for the progress made in terms of low inflation and labor market improvements, which will boost domestic spending, the agricultural sector recovery, continued growth in services and the strong performance of goods exports despite higher US tariffs,” he said.
Meanwhile, Mr Recto said the Department of Finance (DoF) is regularly assessing the performance of revenue collecting agencies as the corruption scandal is expected to hit revenues.
“DOF…stands ready to make necessary adjustments as necessary,” he said. “Nevertheless, economic managers remain committed to fiscal consolidation by closely monitoring the latest developments internally and externally to ensure that we achieve the deficit targets set.”
