Ejercito worries gov't underspending may affect growth, job generation

The investigations into the massive mangling of the budget to generate kickbacks may have revived the chilling effect of probes on government spending last seen following the 2013 Priority Development Assistance Fund (PDAF) scandal.

The recent reduction in the Department of Public Works and Highways (DPWH) budget, Senator JV Ejercito said, underscores the need to balance accountability with economic activity, noting that some contractors were hesitant to accept projects due to possibly low profits.

In DAILY TRIBUNE’s Straight Talk online show, RCBC chief economist Michael Ricafort said government agencies were holding back on infra spending to prevent suspicions of irregularities. “The reforms and improvements we implemented are good, but the concern is that if the material costs become too low and we still give only the standard contractor’s profit, contractors might no longer participate — and that’s what worries us,” Ricafort said.

Ejercito said construction must be considered an economic driver. “It must be balanced. Many are afraid and many have stopped working. So many businesses are connected to construction,” he noted.

He cited the assurance made by Public Works and Highways Secretary Vince Dizon that even with a 25-percent reduction in specific allocations, projects may still generate income.

The President had ordered the DPWH to slash the cost of construction materials by at least 50 percent to lower project costs.

The Senate approved on Wednesday the proposed P568-billion DPWH budget for next year, with the debate extending until 2 a.m.

Data reflects spending drop

Government data has reflected the slowdown in infrastructure spending for a third straight month in September.

Department of Budget and Management data showed expenditures on infrastructure and other capital outlays declined by 42.6 percent to P78.7 billion in September from P137.1 billion a year ago.

From the previous month, it slipped by 7.2 percent from P84.9 billion in August. This marked the third consecutive decline in infrastructure spending since the 31.6-percent contraction in July.

The spending performance of the DPWH continued to register a negative growth rate for the third straight month since July 2025. It was in July during his State of the Nation Address that President Marcos flagged the anomalous flood control projects. 

The DBM attributed the sharp drop in infrastructure spending in September to the delays or non-submission of billings by contractors as the DPWH offices reviewed the implementation and completion of projects around the country. 

This affected the processing of payment claims and actual disbursements by the DPWH, the DBM said.

“Heightened scrutiny by oversight agencies such as the Office of the Ombudsman, the Commission on Audit, the Bureau of Internal Revenue, and the Department of Budget and Management resulted in more conservative and cautious processing of payment claims,” it said.

The DBM said there was also a freeze order on some bank accounts of the DPWH implementing offices that were under investigation.