Recovery in infrastructure spending not likely until Q4

By Justine Irish D. Tabile, Senior Reporter

THE RECOVERY in the National Government’s (NG) spending on infrastructure and other capital outlays is not expected until the fourth quarter, with outlays programmed to remain below year-earlier levels through September before surging toward yearend.

The Development Budget Coordination Committee programmed P251.30 billion in infrastructure and other capital outlays for the third quarter, 2.2% lower than the P256.9 billion spent a year earlier. 

In the fourth quarter, infrastructure spending is then expected to jump by 49.4% to P328.44 billion, from P219.8 billion a year ago.

This would bring second-half infrastructure spending to P579.74 billion, up 21.6% from P476.7 billion in the same period last year.

The figures exclude infrastructure spending coursed through subsidies and equity to government-owned and -controlled corporations, as well as transfers to local government units.

Ser Percival K. Peña-Reyes, a senior research fellow at the Ateneo Center for Economic Research and Development, said the fourth-quarter infrastructure spending target was possible but ambitious and would require a significant acceleration in project implementation.

“A 49.4% year-on-year increase is not impossible because infrastructure spending is typically back-loaded toward the latter part of the year,” he told BusinessWorld via Facebook Messenger.

“However, the government would need to overcome the factors that have held spending back during the first three quarters: procurement delays, project implementation bottlenecks, right-of-way issues, and the more cautious pace of infrastructure releases following the scrutiny over flood control projects,” he added.

Latest data showed infrastructure and other capital outlays reached only P269.4 billion in the January-to-May period, down 42.9% from P471.5 billion a year earlier, amid tighter oversight in the aftermath of last year’s corruption scandal.

To meet the P351.8-billion first-half spending program, June outlays would need to reach P82.4 billion, still 44.6% lower than the P148.8 billion spent in the same month last year.

For the full year, NG infrastructure and other capital outlays are programmed at P931.54 billion, which is 15.1% lower than the P1.097 trillion spent in 2025.

The Department of Budget and Management (DBM) said the government remains committed to accelerating infrastructure spending in the second half to support economic growth.

“We expect public construction to pick up as agencies ramp up project implementation and disbursements,” the DBM told BusinessWorld via Viber.

“We will continue to closely monitor spending performance and work with implementing agencies to address bottlenecks and help keep the infrastructure program on track,” it added.

Philippine Institute for Development Studies Senior Research Fellow John Paolo R. Rivera said spending could rebound strongly in the fourth quarter as agencies catch up on delayed projects, speed up procurement and disbursements, and implement projects prepared earlier in the year.

However, he identified major risks to the outlook, namely, absorptive capacity, procurement bottlenecks, right-of-way issues, project readiness and tighter validation following the recent scrutiny of infrastructure spending.

“If these are not resolved early, simply pushing more spending into the fourth quarter could create implementation pressure,” Mr. Rivera told BusinessWorld.

Mr. Peña-Reyes said achieving the target would depend on project readiness, agencies’ execution capacity and weather and seasonal disruptions.

Projects that have already been awarded and have secured their right-of-way and technical requirements could generate spending relatively quickly, while projects entering procurement only in the fourth quarter are much less likely to contribute significantly, he said.

“A substantial fourth-quarter acceleration is likely, but the risk of undershooting the target is meaningful,” Mr. Peña-Reyes said.

“If the government falls materially short, it would reinforce the concern that the problem is not a lack of budgetary resources but weak implementation capacity and delays in converting appropriations into actual economic activity,” he added.

Reyes Tacandong & Co. Senior Adviser Jonathan L. Ravelas also described the spending target as ambitious but achievable if the government accelerates project implementation and clears spending bottlenecks.

He said delays in procurement, project readiness and implementation could slow disbursements.

“The real challenge is not just spending more in the fourth quarter, but spending efficiently and translating that spending into stronger economic growth,” Mr. Ravelas told BusinessWorld via Viber.

Mr. Peña-Reyes also said the concentration of spending  toward yearend raises the risk that agencies could prioritize faster disbursements over spending quality.

This raises risks such as rushed procurement, weaker project selection, problems in construction quality, errors and leakages, and additional carryovers into 2027.

“The problem arises when the acceleration is too large relative to implementation capacity. It would be helpful to distinguish between healthy catch-up spending and forced catch-up spending,” Mr. Peña-Reyes said.

Healthy catch-up would involve payments for properly procured projects already progressing, rather than rushing new projects simply to meet the annual target, he added.

“It is better to miss part of the fourth-quarter disbursement target than to meet it through low-quality, poorly prepared or rushed infrastructure projects,” he said.

The public should monitor physical accomplishment, project completion rates and procurement quality alongside the headline disbursement figure, Mr. Peña-Reyes added.