Infrastructure spending continued to contract in the third quarter, 2025, amid the fallout from the flood control scandal, according to the Department of Budget and Management (DBM).

In its latest National Government Disbursement Performance report, the DBM said infrastructure spending in October fell by P44.1 billion year on year to P65.9 billion, representing a 40.1 percent decline from the same period last year.

Non-submission of billings by contractors

The DBM attributed the slowdown partly to the “non-submission of billings by contractors amid ongoing validation of the status of implementation and completion of flood control projects.”

Department data show that public infrastructure investment has contracted by 29.4 percent since President Ferdinand R. Marcos Jr. flagged anomalous flood control projects during his State of the Nation Address in late July, translating to roughly P27.4 billion in foregone spending.

From January to October, expenditures for infrastructure and other capital outlays declined by 13.1 percent to P943 billion, down from P1.09 trillion in the same period last year.

Infrastructure spending pullback slowed down economy

Economists have widely cited the pullback in public infrastructure spending — largely linked to the flood control controversy involving the Department of Public Works and Highways (DPWH) — as a key driver of the broader economic slowdown.

In the third quarter of 2025, gross domestic product (GDP) growth slowed to 4.0 percent, down 1.5 percentage pointsfrom the previous quarter and the weakest since 2022. According to BPI lead economist Jun Neri, the contraction in government construction alone shaved 1.6 percentage points off GDP growth.

“The data seem to suggest that the flood control issue may have affected the economy, and the risk is that the full effect has yet to materialize. Without decisive action, the fallout could further drag growth in the coming quarters,” Neri said.

Bangko Sentral ng Pilipinas (BSP) Governor Eli M. Remolona Jr. has warned that fourth-quarter GDP growth could slow further to 3.8 percent, citing persistent governance issues and weak infrastructure spending. The DBM likewise said reduced infrastructure outlays will continue to weigh on overall disbursements for the remainder of the year.

“Lower infrastructure spending is expected to continue to weigh on overall government disbursements for the rest of the quarter while the DPWH boosts efforts to address corruption issues, ramp up investigations and validations, and resume construction activities,” the DBM said.

DPWH introduced reforms

Under Undersecretary Vince Dizon’s tenure, the DPWH has introduced reforms, including a public transparency portal detailing infrastructure projects and procurement processes, the discontinuation of defective flood control works, and the removal of duplicate projects from the proposed P6.7-trillion 2026 national budget.

However, the agency remains under intense scrutiny. Former DPWH Secretary Manuel Bonoan, who led the department when the alleged budget insertions occurred, remains missing after failing to return from overseas on 17 December.

The death of former DPWH Undersecretary Catalina Cabral — whose alleged files on the “floodgate” insertions have drawn national attention — has further fueled controversy. 

On DAILY TRIBUNE’s Straight Talk, Batangas 1st District Representative Leandro Leviste said, in an episode recorded a day before Cabral’s death, that Cabral wielded “more influence on the DPWH budget than the Speaker of the House.”

Dizon himself drew public backlash after calling for the restoration of previously cut DPWH funds in the 2026 budget. He has since acknowledged the erosion of public trust and warned regional directors and district engineers to strictly comply with regulations or face administrative and criminal sanctions.