Government infrastructure spending shrank by nearly two-fifths to ₱88.7 billion in the first two months of the year as project completions and the rollout of the current budget slowed progress billing.

According to the national government (NG) disbursement report by the Department of Budget and Management (DBM), published on April 30, the growth of spending as of end-February was “heavily tempered by the significant contraction of infrastructure and other capital outlays, and lower tax expenditures and subsidies.”

In particular, infrastructure spending contracted by ₱59.5 billion from ₱148.3 billion a year earlier.

This comes on the back of ongoing completion of most projects charged on the 2025 budget. Meanwhile, spending this year’s budget is also underway, affecting the turnaround of progress billing claims.

According to the DBM, the transition between budget cycles has caused timing mismatches in spending, with agencies finalizing prior dues while waiting for new allotments to be released.

“It can also be noted that infrastructure disbursements during the first quarter of 2025 were relatively higher due to the frontloading of some expenditures and settlements of accounts payable ahead of the election ban,” the DBM added.

Such front-loading artificially elevated last year’s figures, making the current contraction appear steeper, the DBM explained.

A significant portion of unreleased allotments remains tied to agency-specific infrastructure budgets, particularly those under the Department of Public Works and Highways (DPWH), the agency further said.

These funds will be released through the issuance of a special allotment release order (SARO).

Infrastructure spending is expected to remain muted in the near term. “Infrastructure disbursements would likely remain soft at least for the first half of the year,” the DBM said, citing lingering base effects and the continued completion of carryover projects.

This could dampen short-term growth momentum, given infrastructure’s function as an economic growth engine.

However, the DBM said that stricter oversight could improve spending efficiency. “The quality of infrastructure spending may benefit from the continuous implementation of strict review and validation process for payment claims,” it said, alongside tighter monitoring of project status and efforts to accelerate delayed works.

Looking ahead, the government expects a pickup in spending in the coming months. This could in part be propped up by the release of ₱46.2 billion to the DPWH to fund the implementation of over 1,700 infrastructure projects nationwide, signaling a potential rebound in public construction activity.