The Asian Development Bank (ADB) has joined the Philippine financial sector’s push against government corruption, warning that graft undermines development and exacts a heavy toll on the poor.

During its Anti-Corruption Day celebration on 9 December at ADB headquarters, ADB President Masato Kanda described corruption as a “tax on the poor,” stressing the opportunity cost of public funds lost to irregularities.

“Every year, corruption diverts funds meant to pave roads, build schools, and shield the vulnerable from economic shocks,” Kanda said. “The loss of these funds is not an accounting error. It is a tax on the poor that siphons away the future. Without integrity, our work is fragile and short-lived.”

In an October Senate budget hearing, then Finance Secretary Ralph Recto said the country lost up to P118.5 billion due to anomalous flood control projects. The controversy dragged third-quarter gross domestic product growth down to 4.0 percent due to reduced public infrastructure spending.

The ADB has since lowered its growth outlook for the Philippines in the wake of the flood control scandal. In its December update of the Asian Development Outlook, the bank cut its 2025 GDP growth forecast to 5.0 percent from 5.6 percent projected in September.

It also trimmed its 2026 projection to 5.3 percent from 5.7 percent, citing weak infrastructure spending amid investigations into publicly funded projects and the impact of natural hazards. ADB warned that “uncertainties arising out of investigations of publicly funded infrastructure projects and weather-related disruptions pose downside risks” to the Philippine economy.

The bank reaffirmed its zero-tolerance policy for corruption and its commitment to strengthening governance and integrity across its operations.

Several major business groups, including the Philippine Chamber of Commerce and Industry, the Financial Executives Institute of the Philippines, and the Makati Business Club, have also issued joint statements condemning corruption in government. These ranged from flood control anomalies to the reallocation of Philippine Deposit Insurance Corporation funds to the National Treasury under former Finance Secretary Recto.

Despite the controversies, the groups expressed optimism about a possible economic rebound in 2026.

“We also recognize that investor confidence is influenced not only by economic fundamentals but also by governance. We therefore urge public institutions to ensure policy stability, uphold the rule of law, and address corruption quickly and decisively,” the groups said in a joint statement.

Last week, the ADB approved two loans totaling $900 million to support the Philippines, while underscoring the role of the private sector in restoring investor confidence amid corruption allegations facing the Marcos Jr. administration.

“The private sector is an important engine of growth and job creation. Their role in the country’s overall economic development cannot be overstated,” ADB Country Director for the Philippines Andrew Jeffries said. “We are committed to assisting the Philippines in finding innovative ways to create an enabling environment that would spur a more dynamic business sector — one that will help drive faster economic growth.”