Fiscal discipline seen eroded by unchecked budget allocations

BUSINESS GROUPS said the government has not gone far enough in curbing unprogrammed appropriations in the newly signed 2026 General Appropriations Act (GAA), warning that these could undermine fiscal discipline and governance.

The Makati Business Club (MBC) said that though the GAA improved, with fewer items not supported by available funding compared to the 2025 edition, it had been hoping that President Ferdinand R. Marcos, Jr. would take aggressive action on constitutionally questionable allocations.

“We believe they could be subject to discretionary disbursement, i.e., patronage. Many of these are social welfare programs, falling under the heading of ayuda, which we classify as ‘soft pork,’” the MBC said in a statement on Tuesday.

Although the President has promised that no politicians will be allowed to intervene in funding allocation, the MBC said an executive order is needed to firm up such promises.

“We are requesting an executive order to create rights-based and rules-based mechanisms to govern the disbursement of ayuda funds and to strictly limit confidential and intelligence funds to legitimate security uses,” it added.

The MBC is also urging the government to classify some of these projects into “conditional implementation” and “later release” categories.

The MBC is a member of the People’s Budget Coalition, which closely monitored the formulation of the 2026 GAA.

On Dec. 29, the coalition sent an open letter to the President flagging P633 billion worth of line items that it considered “vulnerable to plunder,” including P243 billion worth of unprogrammed appropriations.

“The President has vetoed P92.5 billion of the unprogrammed appropriations. We acknowledge that this shows that the President is responsive to feedback from the private sector,” the MBC said.

“The President further assured that the funds’ utilization (comes with) safeguards and is only available when clearly defined triggers and tests are met and will be released only after careful validation,” it added, noting that the implementation phase will be critical.

Foreign Buyers Association of the Philippines President Robert M. Young said that though the GAA report “was quite impressive and substantive in content, the implementation and execution will determine if it indeed is a true and real government action.”

The President signed this year’s P6.793-trillion national budget on Monday, saying that unprogrammed appropriations were held to the “absolute bare minimum” of about P150 billion.

The Financial Executives Institute of the Philippines (FINEX) also expressed concern about the scale of unprogrammed appropriations, noting that these “inherently create uncertainty, weaken fiscal discipline, and heighten governance risks if not subject to strict, transparent conditions.”

“Without clear triggers, safeguards, and public disclosure, unprogrammed funds risk undermining budget credibility, distorting spending priorities, and eroding public trust,” it said.

FINEX welcomed the President’s decision to veto P92.5 billion of the unprogrammed funds.

“This commitment sends a strong signal to markets, taxpayers, and institutions that fiscal discipline and accountability remain priorities,” it said.

“Economic stimulus should not come at the expense of transparency, and every peso, whether programmed or unprogrammed, must be guided by clear objectives, measurable outcomes, and strong oversight,” it added.

Meanwhile, Philippine Chamber of Commerce and Industry  President Ferdinand A. Ferrer urged the adoption of strong fiduciary safeguards and institutionalized stakeholder dialogues during the budget execution phase.

He also supported the passage of the proposed Citizens’ Access and Disclosure of Expenditures for National Accountability, which he said will make every peso of public spending fully transparent, traceable, and accountable.

“It is not enough to know what projects are created and funded, but rather the detailed cost of the project should be transparent to ensure efficient use of taxpayers’ money. There has to be a proper check and balance in every project spending,” he added.

He likewise welcomed Mr. Marcos’ decision to veto P92.5 billion in unprogrammed funds but cited five priority areas where the national budget should be programmed.

These include the development of hard and soft infrastructure systems, investment in education and workforce skills, measures to boost trade competitiveness, initiatives to reinforce economic resilience and manage inflation, and policies that safeguard food, water, and energy security.

“Implemented with integrity and in close consultation with the private sector, the 2026 GAA can be a transformative tool for enhancing Philippine competitiveness,” he said.

“We look forward to deepening our collaboration to ensure public spending effectively empowers micro, small and medium enterprises, creates quality jobs, and catalyzes long-term, inclusive growth,” he added. — Justine Irish D. Tabile