By Justine Irish D. Tabile, Senior Reporter
INFRASTRUCTURE SPENDING fell by 17% year on year in August, Budget department data showed, as economists warned that weak public investment likely weighed on Philippine economic growth in the third quarter.
Latest disbursements data from the Department of Budget and Management (DBM) showed infrastructure and other capital outlays fell by 16.9% or P14.4 billion to P70.5 billion in August from P84.9 billion in the same month a year ago.
This marked the 14th consecutive month of year-on-year declines in infrastructure spending. The downtrend began in July 2025, when President Ferdinand R. Marcos, Jr., in his State of the Nation Address on July 28, raised concerns over substandard and allegedly nonexistent flood control projects and ordered a nationwide audit and review.
Month on month, infrastructure spending slumped by 21.3% from P89.6 billion in July.
The DBM attributed the decline to slower disbursements by the Department of Public Works and Highways (DPWH) and adverse weather conditions.
“DPWH disbursements were affected by ongoing bidding for some projects, while most projects remained under implementation. In addition, P10 billion in checks issued to contractors and suppliers had yet to be encashed,” the department said.
“Adverse weather conditions in August — particularly flooding across parts of Luzon — also slowed construction activities for road infrastructure and rail transport projects,” it added.
The government has programmed P251.3 billion in infrastructure and other capital outlays for the third quarter. With a combined spending of P160.1 billion in July and August, the government would need to disburse P91.2 billion in September to meet the quarterly target.
TIGHTER SCRUTINY
Meanwhile, infrastructure and other capital outlays in the first eight months totaled P522 billion, down 34.6% from P798.4 billion in the same period a year ago.
“The decrease was largely reflective of the lower DPWH disbursements, as procurement compliance, oversight of ongoing projects, payment claims verification, and contractor documentation were strengthened,” the DBM said.
“These efforts are intended to safeguard the integrity of public infrastructure expenditures by ensuring that payments correspond to properly validated and documented works,” it added.
The government had increased scrutiny over public works projects following the flood control mess.
Ser Percival K. Peña-Reyes, a senior research fellow at the Ateneo Center for Economic Research and Development, attributed the slowdown to tighter reviews of infrastructure projects, which have delayed procurement, contract awards, and payments to contractors.
“These are compounded by implementation challenges, including right-of-way issues and agencies’ limited capacity to execute projects. The priority is to speed up compliant projects without compromising transparency and accountability,” he said via Facebook Messenger.
Marco Antonio C. Agonia, an economist at the University of Asia and the Pacific, said operational bottlenecks continue to weigh on infrastructure spending.
“Increased scrutiny meets systemic delays such as ROW (right-of-way) acquisition, procurement lags, cash flow delays, and limited agency-level absorptive capacity have all been constraining infrastructure outlays so far,” he said in an e-mail.
At P522 billion as of end-August, the government has achieved 86.55% of its nine-month target of P603.1 billion, leaving P81.1 billion to be disbursed in September.
This was also equivalent to just 56.04% of the P931.54 billion programmed for infrastructure and other capital outlays for the full year.
Mr. Peña-Reyes said the full-year target remains attainable but will be increasingly difficult to meet.
“The government must spend another P409.5 billion in the final four months — an average of P102.4 billion monthly, compared with P65.3 billion during January-August,” he said. “Unless implementation accelerates significantly, the government risks falling short of its target.”
On the other hand, Mr. Agonia said the government is likely to miss its infrastructure and other capital outlays target for 2026.
“To just meet the spending target, infra spending would have to surge by some 57% for the last four months of the year. A downward revision is likely inevitable,” he added.
Mr. Peña-Reyes and Mr. Agonia expect weak infrastructure and other capital outlays to weigh on gross capital formation and economic growth.
“If this persists, it will weigh on employment, private investment, and overall economic growth,” said Mr. Peña-Reyes, citing the sustained weakness in infrastructure spending and construction activity.
“A stronger recovery requires faster execution of ready-to-implement projects, as prolonged underspending could make the government’s full-year growth target even harder to achieve,” he added.
Mr. Agonia said subdued public expenditure “entails depressed private expenditure for the time being, especially as investment appetite is subdued due to ongoing macro headwinds.”
“As a result, the economy will likely miss its growth target for 2026. A noticeable rebound in public infra spending may only materialize early next year,” he added.
The economy grew by 2.3% in the April-to-June period, bringing first-half growth to 2.6%. This is below the government’s 3.5% to 4.5% target for the year.