Due to slower spending by the Department of Public Works and Highways (DPWH), infrastructure and other capital outlays dropped by 25.3 percent to ₱93.3 billion in July from ₱124.9 billion in the same month last year.

Infrastructure spending also declined by 37.3 percent from ₱148.8 billion in June.

According to the latest Department of Budget and Management (DBM) report published on Thursday, Sept. 25, this contraction was driven mainly by the “muted disbursement performance of the DPWH.”

Contributing to this drop were project scheduling, procurement holdups, and “delays or incomplete submission of progress billings and documentary requirements by contractors.”

Contractors’ compliance with the new Bureau of Internal Revenue (BIR) requirement of tax clearance for processing of final payments also contributed to the slower disbursements.

As such, infrastructure and other capital outlays pulled down overall capital outlays by 22.8 percent to ₱114.5 billion in July from ₱148.2 billion in the same month last year.

Capital transfers to local government units (LGUs) and equity were the other components of capital outlays, with the former dropping 8.6 percent to ₱21.2 billion from ₱23.2 billion last year, while there were zero funds disbursed for the latter.

Infrastructure spending also offset the slight one-percent increase in the national government’s (NG) overall spending during the month, at ₱491.2 billion from ₱486.2 billion a year earlier.

This increase was attributed to the Marcos Jr. administration’s higher interest payments (IPs), allotments to LGUs, and personnel services (PS) spending.

For the first seven months, infrastructure spending decreased by 3.2 percent to ₱713.5 billion from ₱736.7 billion last year.

At end-July, “the lower infrastructure spending resulted mainly from the combined impact of the election ban on public works during the second quarter and the timing of releases for the Revised Armed Forces of the Philippines (AFP) Modernization Program (RAFPMP) of the Department of National Defense (DND),” the report read.

“We may see further slowdown in budget disbursements for infrastructure as the [DPWH] is facing scrutiny among lawmakers amid the corruption scandal,” Oikonomia Advisory and Research Inc. economist Reinielle Matt Erece said.

“This scrutiny may spillover to the budget allocation for the department for 2026, which may reduce the allocation for infrastructure,” Erece added.

Michael Ricafort, chief economist at Rizal Commercial Banking Corp. (RCBC), said that “there should be some cautiousness to prevent anomalies and corruption allegations.”

“However, other infrastructure projects in good order would continue. This could also set the pace on government spending as a major contributor to economic growth and development,” Ricafort said.

But the risk tied to this is slower infrastructure spending and weaker economic growth, even as it could help narrow the budget deficit and contain the buildup of the NG debt.

As Manila Bulletin reported earlier, the government had programmed ₱419.9 billion in infrastructure spending for the third quarter of 2025, the largest quarterly disbursement for the year.

The NG’s quarterly fiscal program, approved by the Cabinet-level Development Budget Coordination Committee (DBCC) last June, showed that following ₱317.5 billion in infrastructure spending in the first quarter, higher disbursements of ₱400.5 billion and ₱374.9 billion are targeted for the second and fourth quarters, respectively.

Based on historical DBCC data, the third-quarter infrastructure spending plan is the second-highest quarterly allotment ever, only exceeded by the ₱421.3-billion infrastructure program for the second quarter of 2024.

The DBCC defines the infrastructure program as inclusive of the NG’s infra disbursements, infrastructure components of subsidy and equity to government-owned and/or -controlled corporations (GOCCs), and transfers to LGUs.

In all, the government is spending a total of ₱1.51 trillion on public infrastructure development this year, equivalent to 5.3 percent of gross domestic product (GDP).

The Marcos Jr. administration plans to further ramp up infrastructure spending in 2026, with a record ₱1.56 trillion set aside for its centerpiece “Build Better More” (BBM) program under the proposed ₱6.793-trillion 2026 national budget.

The 2026 infrastructure program is equivalent to 5.1 percent of GDP, lower than the programmed 2025 ratio and the 5.8 percent recorded in 2024.

The annual budget for public infrastructure spending is projected to increase to new highs of ₱1.69 trillion in 2027 and over ₱1.9 trillion in 2028, 2026 budget documents showed.