Amid a national energy emergency, government response to the oil crisis is expected to accelerate spending in the first half of the year, reversing a slump in infrastructure expenditures last year in the aftermath of the flood-control corruption scandal.

According to the Department of Budget and Management (DBM), measures designed to tackle fiscal concerns tied to the “adverse impact of the Middle East conflict” are expected to fuel the Marcos Jr. administration’s spending recovery in 2026 from the contraction seen in the second half of 2025.

Such programs include the departments of Transportation (DOTr) and Agriculture’s (DA) fuel subsidies. These are expected to “provide direct relief to public transportation drivers, operators, farmers, and fisherfolk.”

Other measures include emergency livelihood and repatriation programs, as well as the ₱20 billion released to the Department of Energy (DOE) for fuel procurement to supplement the country’s supply.

However, “spending growth for the first semester of 2026 is expected to be tempered,” the DBM said in its report on the national government’s (NG) disbursements for full-year 2025, published on April 7.

This expectation cites the higher baseline in 2025, when government agencies frontloaded their budgets early last year to ensure funds were used prior to the five-month-long national and local election ban.

That same period involved sizable capital outlays for the settlement of outstanding accounts payable and progress billings.

Meanwhile, this year’s spending is expected to focus on human capital and agriculture, especially in education, health, and social services, which received larger shares from the ₱6.793-trillion 2026 national budget.

Last year, infrastructure and other capital outlays to government corporations fell 17.3 percent to ₱1.1 trillion from ₱1.3 trillion in 2024. This also fell significantly short of the ₱1.4-trillion program for the year.

Infrastructure spending declined notably during the second half of 2025, largely due to the government’s move to constrict public spending after the flood-control corruption involving the Department of Public Works and Highways (DPWH) erupted.

Despite the expected spur in spending, the Department of Finance (DOF) said the improving fiscal condition—as reflected in the narrower deficit for the first two months of the year—would allow the local economy to weather the energy shocks arising from the ongoing Middle East conflict.

The latest data from the Bureau of the Treasury (BTr) showed the government’s fiscal deficit narrowed to just ₱5.8 billion as of end-February, despite higher spending of ₱836 billion. This gap significantly narrowed from a deficit of ₱103.1 billion in the same period in 2025.

“Our strong fiscal performance in February sets us up for a stable first quarter of this year,” Finance Secretary Frederick D. Go said in an April 7 statement. Recall that the government posted a deficit of ₱446 billion in the first quarter of 2025.

There remains no publicly available quarterly fiscal program that the government has outlined for fiscal year (FY) 2026.

Go said the robust fiscal performance as of end-February acts as the country’s “safety net, giving us the resources to support the economy, especially during this time of uncertainty.” This addresses concerns surrounding the need to extend support to vulnerable sectors, with proposed measures posing high risks to the country’s revenue collection.

“With tax and non-tax revenues growing and expenditures kept targeted, we have successfully reduced our fiscal deficit. This fiscal buffer allows us space to provide timely, targeted, and managed subsidies to help those most affected in our country by the Middle East event,” Go said.

This early display of robust fiscal performance by the DOF and its attached agencies—the bureaus of Internal Revenue (BIR), Customs (BOC), and the Treasury (BTr)—enables the Marcos Jr. administration “to maintain fiscal discipline and ensure a sustainable path in managing the current crisis.”

During the two-month period, tax authorities increased their collections by more than three percent to ₱692.6 billion from ₱671.9 billion in the same period in 2025.