Finance secretary allowed to secure loans for AFP modernization

The Secretary of Finance has the authority to arrange additional funding—including loans and grants—to support the Armed Forces of the Philippines (AFP) modernization program under the 2026 General Appropriations Act, House Minority Leader Marcelino “Nonoy” Libanan said on Sunday.

Libanan said Congress included a special provision in the 2026 budget that allows the Finance Secretary to negotiate, contract, and enter into domestic and foreign financing arrangements for AFP modernization projects. These arrangements may include loans, grants, credit facilities, or blended financing mechanisms, subject to presidential approval with the concurrence of the Monetary Board and applicable legal limits.

The provision aims to provide the government greater flexibility in funding AFP modernization projects in a timely and cost-effective manner. Defense acquisitions typically involve large, long-term, and highly technical contracts, and access to multiple financing options—such as concessional loans, grants, or blended facilities—can reduce costs and accelerate project delivery.

The AFP modernization program covers the acquisition of advanced military equipment, weapons systems, and defense-related technologies, including intelligence, surveillance, and other operational capabilities.

Under the 2026 national budget, Congress allocated P40 billion in capital outlays for AFP modernization, an increase from P35 billion in 2025. An additional P50 billion was authorized under unprogrammed appropriations for modernization projects. Release of these funds will depend on the availability of excess or new revenue collections or approval of loans for foreign-assisted projects.

Libanan also urged Congress to prioritize the passage of the next AFP modernization law this year to ensure continuity and long-term planning. The 15-year Revised AFP Modernization Program, enacted in 2012, is set to expire in 2027.