The national government has ordered state agencies to implement sweeping austerity measures, including a 20 percent cut in operational costs and the suspension of major infrastructure projects, to shore up funding as a deepening Middle East conflict threatens the nation’s energy security.

Budget Secretary Rolando U. Toledo issued National Budget Circular No. 602 on April 23, mandating all departments, state universities, and government-owned corporations (GOCCs) to immediately slash spending.

The Department of Budget and Management (DBM) directive follows a national energy emergency declaration prompted by regional volatility that the Marcos administration said poses an “imminent danger” to the country’s fuel supply and price stability.

Under the new guidelines, the DBM is targeting a minimum 20 percent reduction in discretionary spending. The cuts cover a broad spectrum of government activity, including official travel, training programs, scholarships, and office supplies.

Even utility consumption and representation expenses—often used for official hosting and meetings—must be pared back as the government pivots toward a crisis footing.

The belt-tightening extends into the administration’s capital investment plans. The DBM has frozen the procurement of motor vehicles and the construction of new government facilities that have yet to begin.

While the government remains committed to essential services, the circular specifies that only vehicles for health, uniformed services, and disaster response will be exempt from the moratorium. New building projects not yet ready for implementation must be deferred indefinitely to preserve liquidity.

These measures are designed to consolidate "unobligated allotments," referring to funds approved in the 10.1 trillion peso 2026 national budget that remained unspent at the end of the first quarter. Agencies are required to submit certifications of their identified savings to the budget department by May 15.

The resulting pool of funds will be redirected to the Unified Package for Livelihoods, Industry, Food, and Transport, or UPLIFT. This emergency program is intended to provide a financial cushion to the transport and agricultural sectors, which are most vulnerable to the surging cost of imported fuel.

Despite the aggressive cuts, the DBM cautioned that agencies must ensure cost reductions do not lead to service disruptions or compromise their primary mandates. The austerity measures will remain in effect for the duration of the energy emergency.