Next year's midterm elections could temper government expenditures due to a scheduled ban on new spending, such that the Cabinet-level Development Budget Coordination Committee (DBCC) has urged prompt disbursements as well as implementation of programs and projects under the proposed record P6.352-trillion 2025 national budget.
"Government spending surged notably due to robust investments in infrastructure, in line with the administration's 'Build-Better-More' program and capital outlay projects. However, there may be a slowdown in project execution during the first half of 2025 on account of the upcoming midterm national and local elections," the DBCC warned in its recently published 2025 Fiscal Risks Statement report.
As such, "the timely passage of the fiscal year 2025 national budget, coupled with EPAs before the spending ban given next year's national election, is crucial to sustaining growth," the DBCC pointed out.
In an informal chat with Manila Bulletin during a Department of Budget and Management (DBM) event on Tuesday night, Dec. 10, Budget Undersecretary Goddes Hope O. Libiran said they are anticipating the passage of the 2025 budget in the coming days.
The DBCC, which groups President Ferdinand Marcos Jr.'s economic managers, is aiming for gross domestic product (GDP) growth of six to eight percent next year, supported by the over P6.182 trillion programmed to be spent on public goods and services.
Next year's spending program includes a record more than P1.538-trillion expenditures on infrastructure, equivalent to 5.4 percent of GDP.
In particular, the DBCC said it is bracing for "a slowdown in infrastructure disbursements and social welfare and housing dole-outs expected during the first half of 2025, considering the prohibition against the release, disbursement, or expenditure of public funds 45 days before a regular election, subject to certain exceptions" before next year's May 12 polls.
For the DBCC, "these risks may be mitigated by the proper and timely conduct of early procurement activities (EPAs), removing them from the ambit of the prohibitions."
The DBCC enjoined implementing agencies that "[when] EPAs cannot be feasibly undertaken or when projects are delayed for other reasons, catch-up plans should be prepared during the election ban so that they may be implemented as soon as the ban is lifted."
Also, "the timely issuance of the implementing rules and regulations (IRR) of the New Government Procurement Act (NGPA) will be expedited, alongside the provisioning of appropriate training to government personnel and other stakeholders on the new procedures," the DBCC added.
DBCC Chair and Budget Secretary Amenah F. Pangandaman told Manila Bulletin that the IRR of the NGPA under Republic Act (RA) No. 12009 shall be out within this month of December.
Pangandaman said that despite the NGPA's provisions complementing the Tatak Pinoy Act to prioritize procurement from local sources as well as domestic industries, foreign firms and chambers seem to have no objection to this rule.
The Budget chief nonetheless disclosed that during last month's joint workshop of the DBM and the US-ASEAN Business Council (USABC), American companies here in the country -- mostly in the information technology (IT) and pharmaceutical sectors -- sought some "flexibility" to speed-up their potential participation in public procurement opportunities.
In its report, the DBCC cautioned the national government against underspending and even overspending risks possibly resulting from "efficiency of agencies in executing their programs and projects, as well as risk events such as weather disturbances, external developments, supply chain disruptions, and potential slowdowns in project implementation due to the upcoming local and national elections in 2025."
"Consistent monitoring of agency outcomes and the refinement of proposals in line with budget priorities and absorptive capacities, as well as the recommendation of pertinent issuances thereto, shall be employed to mitigate under or overspending and ensure the continued delivery of public goods and services," the DBCC said.
As next year's elections draw near, the DBCC also cited that "revenue-eroding measures, such as tax exemptions for certain sectors and products, are more likely to be proposed" by legislators seeking reelection through populist bills.
The DBCC likewise conceded that next year's local elections "could negatively impact the plans, programs, and projects of the local government units (LGUs)."
"The implementation of [LGU] programs and projects may be significantly delayed due to political reasons. The new leadership may identify new priorities, allocating a significant portion of the resources to them. The priorities of the local officials may not always align with the policies and programs of national agencies, which may result in undue delays or substantial modifications in the implementation of joint projects," the DBCC noted.