Making every peso count
The “ber months” in the Philippines are often associated with the start of the Christmas season. It also coincides with the height of national budget deliberations. This is the time when marathon sessions are being held in Congress to dissect and review the government’s spending plan for 2027.
With increasing uncertainty both home and abroad, the Marcos administration should focus on things that it can control. Restoring fiscal order and discipline with the way the government manages and spends public money should be at the top of that list.
The Philippines is currently confronted with a limited fiscal space. For laymen, it means less room to fund priority programs and projects largely because of the size of the budget deficit (expenditures are larger than revenues), and the country’s debt.
In 2025, the budget deficit stood at P1.6 trillion, equivalent to 5.6 percent of the economy. While it has gone down from its 8.6 percent peak in 2021, it is still far from the 3 percent target deficit that this administration originally planned to achieve by 2028.
Meanwhile, the national government debt continues to worsen. As of July 2026, it climbed to P19.4 trillion. More importantly, the debt to gross domestic product (GDP) ratio rose to 66 percent as of the first half of 2026, a level not even seen during the height of the pandemic. Based on revised estimates, this ratio will remain above 64 percent at least until 2028. The international threshold for manageable debt level is 60 percent of GDP.
In practice, having a budget deficit and debt is not automatically bad provided that funds are actually spent on productive sectors that will help grow the economy.
But that is not what happened. Corruption, misallocation of funds, as well as lack of transparency and accountability persisted. The end result is a weak economy with a ballooning debt and limited fiscal space.
Rise in mandatory allocations. According to the Congressional Policy and Budget Research Department, 64 percent of the 2027 budget will be earmarked for legally mandated items such as salaries and pension of government and military personnel, debt interest payments, and national tax allotment for local government units. Less money will be available for funding growth enhancing sectors.
Uncertainty in the Middle East. Escalating conflict in the region could lead to higher oil prices in the coming weeks. The government may again need to provide targeted assistance to vulnerable Filipinos.
Stronger typhoons and natural disasters. Extreme weather events have devastated agriculture and infrastructure in the country.
Higher interest rates and weak peso leading to expensive borrowing. Interest payments account for 15 percent of the proposed national budget. This will reduce the amount available for classrooms, health care and nutrition, food, agriculture, and infrastructure.
To maximize the use of our limited resources, the government must ensure that every peso counts. It must spend public funds judiciously and transparently.
The following are our recommendations:
Adhering to the Philippine Development Plan (PDP). The PDP is the most important policy document for every administration. It provides the blueprint of what the government plans to do and achieve during its term of office. Spending priorities should always be anchored on the PDP.
Redirecting public expenditures. Funding for unproductive items must be reallocated toward more productive and growth supporting programs. For example, the P71 billion budget for unconditional ayuda in 2027 would be better used for Pantawid Pamilyang Pilipino Program, school-based feeding, classroom building, agricultural services, and ease of doing business initiatives of the Anti-Red Tape Authority.
Strengthening coordination between executive and legislative. The President should convene and preside over the Legislative and Executive Development Advisory Council twice a month to rigorously monitor the budget process and ensure that national priority projects remain adequately funded and implemented on schedule.
Enhancing transparency and accountability in the budget process. Congress should open to the public the entire budget process, particularly bicameral conference meetings, to allow citizens to scrutinize the budget, and flag unnecessary insertions or amendments. The President must use his line-item veto power to strike down any unnecessary insertions in the budget.
Intensifying budget monitoring. The President, and his Cabinet, should devote more time conducting provincial visits. This would allow them to personally verify reports coming from line agencies and assess progress of national projects such as on food production, education, health care, and infrastructure.
Making every peso count should be the guiding principle of every administration. It has to be aggressive in enforcing order and discipline in spending our limited resources. Much has already been lost to corruption. And it is within the control of each administration whether this is the legacy it wants to leave behind.
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Gary B. Teves is a Filipino politician and public servant who served as secretary of the Department of Finance.
