Finance Secretary Ralph Recto revealed on Tuesday, 14 October 2025, that the Philippine economy has lost between P42.3 billion and P118.5 billion due to anomalous flood control projects.
Speaking during the Department of Finance’s (DOF) 2026 budget hearing, Recto said the losses translate to 95,000 to 266,000 potential jobs and warned that the economy’s sluggish growth may continue until early 2026.
“We, at the DOF, will never tolerate corruption or wasteful spending,” he said. “The recent flood control controversy may have cast a shadow on public spending, but this is the start of a cleanup, and we only see upside over the next few months.”
According to the ASEAN+3 Macroeconomic Research Office (AMRO), the Philippine economy maintained a 5.6% growth rate as of September 2025—a figure Recto believes could have been higher if not for corruption in public works.
“If part of the budget hadn’t been lost to corruption, the economy might’ve been growing by around 6% to 6.2%, and revenue collections from the BIR [Bureau of Internal Revenue] and BoC [Bureau of Customs] would’ve been higher,” Recto said.
Despite the losses, Recto said the DOF remains confident that the country will still meet the lower end of its 5.5 percent to 6.5 percent growth target this year.
He added that the government aims to raise revenue collections by 10.2 percent in 2026 without imposing new taxes.
“We want to collect better, spend smarter, and borrow less,” said Recto, who referred to the DOF as the country’s “pambansang fundraiser.”
Recto, who co-authored Republic Act 9337 (the Expanded Value-Added Tax Law) during his first Senate term, noted that reforms in taxation and fiscal discipline remain central to his economic strategy. The 2005 law raised the VAT rate from 10% to 12% and expanded coverage to include previously exempt items such as petroleum, electricity, and certain transport and toll services, measures that boosted government revenues but drew widespread public and political backlash.