Gov’t faces constraints in funding new 2027 projects
The Marcos administration’s proposed 2027 national budget has limited room to fund new and emerging priorities as mandatory expenditures increasingly crowd out the allocable portion, according to the Congressional Policy and Budget Research Department (CPBRD).
In its latest budget brief, the CPBRD estimated that only 2.2 percent of the proposed P7.2-trillion budget would remain as fiscal space for Tier 2 spending, or new and emerging priorities. This is sharply below the 11.8-percent average recorded from 2016 to 2026.
The rest of the budget will go to Tier 1 allocations for ongoing programs, activities and projects. This category is projected to account for 52 percent of the expenditure program, while automatic appropriations make up 38 percent and special purpose funds another 9 percent.
“The limited and declining fiscal space for Tier 2 is a growing concern, particularly in the current economic and social environment. Given the ongoing economic shocks and the increasing likelihood of emergencies, the budget must retain sufficient capacity to support citizens and respond effectively to emerging needs,” the state-run think tank said.
The CPBRD also flagged the constrained fiscal space available to implement certain laws, saying 129 laws that had been enacted from 1991 to 2025 remained entirely unfunded as of October 2025, while another 113 were partially funded.
The shrinking room for new spending comes as mandatory expenditures are projected to account for 63.8 percent of the national budget in 2027, up from an average of 56 percent between 2015 and 2025.
This will reduce the allocable portion of the budget to 36.2 percent next year from an average of 44 percent in 2016 to 2025.
“Huge and growing mandatory expenditures in the budget submitted for Congressional review and authorization substantially restrain the capacity of the national budget to respond to ongoing and emerging development concerns,” the CPBRD said.
“In this regard, allocative efficiency should become a primary concern in Congressional budget review, especially considering the fact that the budget is largely supported by government borrowings and the continuing constriction of the budget’s allocative portion in support of the country’s development plans,” it added.
Breaking down the mandatory expenditures, personnel services are expected to account for around 26.3 percent of the budget in 2027, roughly in line with the 2019 to 2025 average.
The share of the national tax allotment (NTA) to local government units, meanwhile, is projected to rise to 18.3 percent from an average of 15.7 percent.
Debt interest payments are also eating up a larger share of the budget, rising to a projected 15.5 percent in 2027 from an average of 10.7 percent in 2019 to 2025.
Combined, personnel services, NTA and debt interest payments would account for close to 93 percent of mandatory expenditures on average from 2019 to 2027, the CPBRD said.
“While the annual national budget levels have consistently grown, mandatory expenditures absorb most of the budget increases,” the CPBRD said.
“In fact, from 2024-2025 and for 2026-2027, the total increase in allocation for mandatory expenditures far exceed the overall increase in the national budget, a situation most likely due to the reduction in level of allocable expenditures,” it added.
