Philippine Congress Urged to Scrutinize 2027 Budget Amid Fiscal Constraints

The Congressional Policy and Budget Research Department (CPBRD), the policy research arm of the House of Representatives, has urged Congress to closely scrutinize proposed spending increases and shift funds away from underperforming government programs as part of the deliberation for the 2027 national budget. This recommendation comes amid a context of slower economic growth, high inflation, and rising debt, which leave less room for fiscal expansion. The CPBRD emphasized that greater emphasis should be placed on the composition, implementation readiness, and demonstrated effectiveness of public expenditure, rather than on expenditure growth alone. While the proposed P7.2-trillion national budget for 2027 might remain financeable under baseline assumptions, the department cautioned that this does not imply ample room for the government to increase spending or guarantee long-term fiscal sustainability. "Financeability should therefore not be equated with the existence of ample fiscal space or with longer-term fiscal sustainability," it said. The research body recommended that lawmakers scrutinize agency proposals based on their objectives, capacity to implement projects, historical use of funds, results, and expected economic and social benefits. Programs with persistent implementation problems or little evidence of effectiveness should be restructured, scaled back, or have their funding redirected, while effective programs and those considered priorities should be protected. These recommendations follow the Development Budget Coordination Committee’s decision on May 25 to cut its 2026 gross domestic product (GDP) growth target to 3.5%-4.5% from 5%-6%. This weaker outlook translates to an estimated P350-billion loss in potential real economic output, according to the study. Economic managers have also raised their 2026 inflation forecast to 6%-7% amid higher oil prices, agricultural disruptions linked to El Niño, and tensions in the Middle East. The CPBRD noted that government spending has generated relatively limited additional economic activity in recent years, reducing the ability of spending increases alone to support growth. Furthermore, under moderately worse economic conditions, the study projected government debt to reach 67% of the economy by 2027, and could rise to 70.7% under more severe conditions. These risks underscore the necessity for Congress to establish clear contingency plans during its budget deliberations. Lawmakers should determine in advance which expenditures would be protected if revenues fall below target, which programs could be delayed or reduced, and what other adjustments would be required if economic conditions deteriorate, the think tank said. The 2027 national budget should be used not only to fund government operations and programs but also to boost the state’s ability to withstand economic shocks while maintaining essential public services.