Former Bangko Sentral ng Pilipinas Governor and Finance Secretary Benjamin Diokno said President Ferdinand Marcos Jr. bears part of the responsibility for the government's flood control controversy, arguing that the Chief Executive could have prevented controversial budget changes by exercising his constitutional line-item veto power. 

Speaking on Thought Leaders with Cathy Yang on One News, Diokno said the President's "Mahiya naman kayo" warning against questionable budget insertions last year could not be separated from his own role in approving the spending measure.

"That thing could not have happened without his participation," Diokno said.

"On the budget, the President has what is called line-item veto power. That power is awesome. He allowed that. He didn't exercise his line-item veto power. So he's partly to blame for that mess." 

Diokno said Marcos' upcoming State of the Nation Address on 27 July would be a "moment of truth," with the public expecting concrete actions after the President publicly condemned alleged irregularities in flood control spending.

"People will be asking him, 'What have you done after that?'" Diokno said. 

The former finance chief also criticized what he described as the declining quality of government spending, saying funds intended for major infrastructure projects had been diverted to flood control allocations.

"Not only have they digressed from the program, the quality of spending has also deteriorated," Diokno said.

"There's so much ayuda in the budget now and less of the real projects."

He specifically cited funding previously allocated for the Metro Manila Subway and the North-South Commuter Railway.

"They took away the money allocated for the subway and the North-South rail system and used it for these flood control projects," he said. 

Diokno warned that the controversy poses a greater economic threat than the recent spike in global oil prices because it undermines investor confidence and delays public infrastructure.

"The flood control shock is worse because it means loss of confidence. Credibility is very important," he said.

He noted that construction contracted by 31.5 percent in the first quarter and warned that the slowdown could worsen as infrastructure projects remain stalled.

"The trust and confidence of both domestic and foreign investors will slow down economic growth," Diokno said. 

Despite his criticism, Diokno said the administration still has enough time to return to its original fiscal roadmap.

"He still has two years. Every day counts," he said.

"If he wants to get back on track, it can be done."

He urged the President to prioritize governance over politics.

"If I were the President, I won't think of who's going to succeed me. I would just do my business and focus on what can be done within my six-year term," Diokno said. 

He also warned that governance issues could eventually affect the country's investment-grade credit rating if left unresolved.

"Credibility is very important. Right now we suffered because of that flood control mess. We have to demonstrate that we're doing something about it. Otherwise, foreign investors are not going to come here," Diokno said.