The Marcos administration’s infrastructure spending plunged by more than two-fifths in the first quarter, dealing a significant blow to state-led economic momentum as agencies tightened oversight following the high-profile corruption scandal.

According to the latest national government disbursement report from the Department of Budget and Management (DBM), capital outlays and infrastructure expenditures collapsed 43.5 percent to ₱147.8 billion in January to March from ₱261.8 billion in the same period last year.

The contraction was punctuated by a severe slump in March, when spending plummeted by nearly half to ₱59.1 billion.

The DBM data followed recent gross domestic product (GDP) figures showing that the Philippine economy slowed to a post-pandemic low of 2.8 percent in the first quarter, weighed down by high fuel costs and the lingering fallout from public works anomalies.

Total national government disbursements for the quarter managed a modest 3.2 percent increase to ₱1.49 trillion, driven primarily by non-capital operational costs.

However, the budget department conceded that the lower outturn for infrastructure and other capital expenditures significantly dampened overall fiscal expansion for the period.

The DBM attributed the sharp decline partly to base effects. The first quarter of 2025 saw a massive frontloading of capital outlay projects as agencies rushed disbursements ahead of election-related spending bans.

The current fiscal year has instead been bogged down by the deferred settlement of dues from prior-year obligations and a slower deployment of the newly enacted ₱6.79 trillion national budget.

The deceleration was most pronounced in the Department of Public Works and Highways (DPWH), the primary driver of state infrastructure.

The agency has been forced to adopt aggressive validation processes for billing claims to ensure project quality and legal compliance. The procedural shift follows a sweeping flood-control corruption scandal that erupted in the second half of 2025, an event that triggered strict fiscal squeeze and eroded both business and consumer sentiment.

Economic managers are projecting a swift turnaround in the second quarter, banking on a seasonal dry-weather construction push. To jumpstart activity, the budget department recently released ₱72.1 billion in fresh allotments to the public works department for capital projects.

An additional ₱17.3 billion was deployed for school building construction, alongside ₱41 billion earmarked for irrigation systems under the National Irrigation Administration.

Infrastructure departments are expected to take advantage of the summer season to expedite construction activities. The government is counting on these strategic fund releases and favorable weather to build spending momentum, aiming to anchor a sustained rebound in the second half of the year to preserve its downscaled annual economic goals.