The economic upside of the 2026 budget

After a near stalemate and despite challenges encountered, the 2026 budget was finally approved by the bicameral conference committee. Next year’s P6.793-trillion budget is higher than the P6.326 trillion in effect this year.

The budget tells us many things, especially in terms of what this administration holds important, the competing issues it must weigh for the country’s growth and development, as well as the direction it wishes to take in being an investment-driven economy.

In its current form, the 2026 budget transmits positive signals to the Filipino public and to the business community. They are indications of stability, genuine intention to introduce reforms, a desire to strengthen local economies, a high awareness of risks, and a prioritization of human capital.

Foremost, the budget clearly reflects the economic agenda of the Marcos administration. The priority is clear, and that is to have steady fundamentals to lessen uncertainty and make planning easier for current and potential investors alike. International organizations like the World Bank and International Monetary Fund have downgraded their projections on the Philippines’ economic growth. The Philippines is resolute to achieve its growth targets nonetheless.

The 2026 budget is the first to be approved through a transparent process, with deliberations live-streamed and archived. This is a move that should inspire confidence among investors and the public alike, especially given the public works scandal that the nation is now facing. Transparent deliberations show that the government is serious about drastically minimizing the opportunities for corruption and other sinister moves on the part of public servants. While the livestream was not without challenges, it was clearly a move to improve investor trust in governance and public finance integrity.

Funds were also realigned toward health and disaster risk management. There was a conscious effort to divert funds away from the corruption-plagued Department of Public Works and Highways, whose budget was slashed by P351.4 billion to P520.6 billion, 40% lower than the P881 billion originally proposed by the Palace.

While the administration is cognizant of the need for infrastructure development and its multiplier effects, the 2026 budget showed caution in enabling a graft-ridden agency while reforms are still being implemented. The difference in funds was diverted to agencies like PhilHealth and the National Disaster Risk Reduction and Management Fund. These are intended to provide essential health services and ensure disaster resilience among Filipinos.

The 2026 budget also recognizes the supremacy of human capital and the need to invest in our nation’s future. The education sector is receiving a record allocation of P1.38 trillion, targeting workforce skills and human capital development. This will contribute to productivity and competitiveness in a tight labor market.

Finally, the budget intends to boost economic activity, not only on the national level but also on the local and regional level. The big increase in Local Government Support Fund (LGU financial assistance) — from the National Expenditure Program’s proposed P5 billion to about P37 billion — could drive regional infrastructure and services, pushing localized economic activities.

To be sure, despite the relative transparency of the process, several concerns have been raised. For instance, the restoration of P243 billion in unprogrammed appropriations raises concerns about transparency and accountability, given past controversies surrounding its use. While these funds provide flexibility to address unforeseen expenses and foreign-assisted projects, their reliance on excess revenues or foreign loans poses risks to fiscal stability. In fact, the Senate initially sought to eliminate unprogrammed appropriations entirely, citing concerns over its potential for misuse and lack of immediate funding.

However, the bicameral committee ultimately retained the funds, with assurances that they would not be used for controversial projects like flood control. Unprogrammed appropriations remains a critical tool for funding foreign-assisted projects and social programs, which are essential for development. All this simply exerts greater pressure on the government to ensure that such funds are allocated effectively, spent for the pure benefit of the people, and are handled free from corruption.

The budget does provide opportunities for economic growth through strategic investments. For instance, despite constraints, the inclusion of funding for foreign-assisted infrastructure projects. Approximately 55% of the P243 billion in unprogrammed appropriations is allocated to infrastructure projects co-financed by international development partners, such as the Japan International Cooperation Agency, the World Bank, and the Asian Development Bank.

Projects such as the Metro Manila Subway and the North-South Commuter Railway present an opportunity to boost economic activity, improve transportation, and attract foreign investments. Policymakers must focus on maximizing the impact of these projects while ensuring that they align with long-term economic goals.

In the end, the 2026 budget and the process that attended its finalization show the administration’s awareness of the issues that have prevented the budget from truly belonging to the people, and its intention to address these issues once and for all. Often, there are no clear-cut answers, and the decisions are about weighing the advantages and disadvantages of one course of action over another.

May the 2026 budget truly achieve its objective of helping Filipinos achieve a better quality of life and propel the Philippines to greater economic heights.

Victor Andres “Dindo” C. Manhit is the president of the Stratbase ADR Institute.