Numbers are showing it

The numbers are no longer whispering. They are stating plainly what many have sensed, denied, or endured for months.

What had been anticipated finally materialized when the President, in his July 28 State of the Nation Address, publicly acknowledged the extraordinary scale of corruption and governance failure in the Philippine bureaucracy. Congressional investigations that followed, reinforced by the findings of the Independent Commission for Infrastructure, did not expose an isolated episode of misconduct. They revealed a pattern, and it is ugly: public funds treated less as a sacred trust and more as liquid opportunity, accessible to those positioned, either by election or appointment, to command it.

This moment should not be reduced to a mere scandal. It reflects policy drift — the gradual divergence between institutional intent and governing reality. The Philippines has not lacked laws, procedures, or formal oversight bodies. Procurement rules exist. Audit authorities operate. Disclosure frameworks are codified. Yet enforcement capacity has significantly weakened, political incentives have mutated, and accountability has fractured across competing coalitions. Policy remains formally intact while practice departs from purpose. Corruption is not merely unlawful extraction; it is evidence of institutional breakdown.

The practical consensus on defining corruption is unambiguous. The World Bank frames it as the abuse of public office for private gain. Transparency International describes it as the abuse of entrusted power for private gain. Both formulations capture the essence of what surfaced in the flood control controversy — where infrastructure spending designed to mitigate climate vulnerability allegedly became a channel for rent extraction, measured in billions of pesos.

Measurement of corruption is inherently indirect, yet systematic attempts exist.

Transparency International’s Corruption Perceptions Index (CPI) remains the most widely referenced cross-country gauge of public sector corruption. It aggregates multiple datasets, including those from the World Bank, World Economic Forum, and other institutional surveys, compressing them into a standardized scale. While the CPI excludes citizen victimization experience and private-sector corruption, its methodology undergoes continual review to maintain analytical robustness and validity.

Against this technical backdrop, the Philippines’ 2025 outcome was less of a shock than a confirmation. After sustained public revelations, perception aligned with quantification. The country registered 32 points, its lowest score since 2012, ranking 120^th of 182 jurisdictions. This contrasts sharply with the 2014 peak of 38 points — when governance reform momentum, procurement transparency initiatives, and anti-corruption prosecutions were widely viewed as credible signals of institutional tightening.

Comparative context deepens the implications.

Governance leaders — Denmark, Finland, Singapore, New Zealand — consistently combine administrative professionalism with high transparency. At the opposite extreme lie states characterized by institutional collapse or chronic conflict. Within East and Southeast Asia, the Philippines now trails not only advanced economies but also several middle-income peers pursuing bureaucratic modernization and digital governance reforms. That relative slippage matters because investors evaluate destinations comparatively, not in isolation.

More troubling is the distance from benchmarks: regional CPI average of roughly 45 and global average of 42. These gaps signal more than episodic governance lapses. They indicate systemic perceptions of weak fiscal guardianship, incomplete sanctioning of misconduct, and fragile public trust. Public outrage surrounding alleged flood control fund diversion, cited explicitly in CPI commentary, reinforced these perceptions but did not create them.

The index’s evaluative components clarify the cumulative nature of such scoring. It assesses bribery prevalence, diversion of public funds, sanction credibility, bureaucratic burdens that foster rent-seeking, nepotistic appointments, disclosure transparency, whistleblower protection, state capture, and information accessibility. The Philippine score therefore reflects layered historical memory: procurement controversies during the pandemic, unresolved pork-barrel issues, Yolanda rehabilitation criticism, and recurring governance disputes. Perception compounds; credibility decays incrementally.

Viewed from an institutional perspective, the result constitutes more than reputational discomfort. It reflects skepticism toward democratic checks and balances — particularly when impeachment proceedings appear politicized or when judicial outcomes seem unevenly applied across political hierarchy. Such perceptions reinforce policy drift: the formal architecture of accountability persists, yet its practical application appears selective or uncertain.

This institutional dimension intersects directly with economic interpretation.

As we wrote last week, there are two dominant narratives that attempt to explain the country’s moderating growth momentum. One emphasizes structural constraints including manufacturing stagnation, limited tradable expansion, productivity gaps, and exchange-rate debates, treating policy shortcomings largely as technocratic miscalculation. The other dismisses corruption as analytically convenient, arguing that deeper issues lie in oligarchic concentration, foreign dominance, or dynastic politics.

Both narratives, in isolation, are incomplete. Governance quality is not peripheral; it shapes the feasibility of structural reform itself. Corruption and weak institutions influence industrial policy credibility, infrastructure execution, fiscal prioritization, and regulatory predictability. They determine whether democratic-development strategies gain traction or dissipate. Governance weakness is not an alternative explanation, it is often the transmission mechanism through which structural weakness persists.

Consequently, corruption perception should be understood as a macroeconomic variable with measurable channels of influence.

Investment responds immediately. Empirical research on Southeast Asian capital flows consistently links governance indicators with FDI allocation patterns. In the Philippine context, business surveys and procurement participation data have repeatedly noted reluctance among multinational firms to engage in public bidding environments perceived as opaque or administratively burdensome. Elevated compliance costs and unpredictability translate into reduced capital formation and weaker technology transfer.

Fiscal transmission follows. Public expenditure efficiency correlates strongly with governance integrity. Leakages reduce multiplier effects of infrastructure spending, limit human capital investment, and constrain innovation capacity. Historical Philippine experience, from delayed project execution to underutilized capital budgets, demonstrates how governance distortions translate into lower productivity and elevated logistics costs, factors frequently cited in assessments of competitiveness, or ease of doing business.

Financial and external channels reinforce these effects. Market confidence influences sovereign spreads, portfolio flows, and exchange-rate volatility. Governance perception is embedded in credit-rating outlooks and investor risk modeling. With the Philippines managing persistent current account pressures, shifts in sentiment can magnify currency and funding vulnerabilities.

Finally, structural transformation itself is affected. Rent-seeking environments divert talent and capital toward arbitrage rather than innovation. Export diversification weakens when infrastructure credibility falters. Tourism, manufacturing integration, and high-value services — sectors essential to escaping the lower-middle-income threshold — require institutional reliability that corruption perceptions undermine.

The implication is clear.

The CPI score is not symbolic commentary or moral signaling. It is a pricing input embedded in economic decision-making. Investors, lenders, and analysts take into account governance perception in their models shaping capital allocation, risk premia, and growth expectations.

The numbers therefore perform a function beyond description. They discipline assumptions.

They remind us that policy drift is rarely dramatic. It advances quietly through normalized inefficiency, tolerated impunity, and incremental erosion of institutional credibility. By the time the data crystallize its effects, divergence is already entrenched.

If there is urgency in this moment, it lies not in reputational repair but institutional recalibration. Anti-corruption cannot remain episodic outrage followed by procedural fatigue. It must restore alignment between authority, accountability, and public purpose.

Because in the end, corruption does more than steal resources. It distorts incentives. It reallocates opportunity. It reshapes expectations about what governance can deliver.

And when expectations decline far enough, growth itself adjusts downward — not abruptly, but persistently — until underperformance becomes mistaken for destiny.

The numbers are showing it.

The question is whether we are prepared to read them for what they truly say.

Diwa C. Guinigundo is the former deputy governor for the Monetary and Economics Sector, the Bangko Sentral ng Pilipinas (BSP). He served the BSP for 41 years. In 2001-2003, he was alternate executive director at the International Monetary Fund in Washington, DC. He is the senior pastor of the Fullness of Christ International Ministries in Mandaluyong.