Philippines' Marcos proposes $118 billion budget for 2027 amid economic slowdown

Philippine President Ferdinand Marcos Jr. has submitted a proposed budget of 7.2 trillion pesos ($118.1 billion) for 2027 to Congress, marking a 6% increase from the current year's allocation. This move comes as the administration seeks to revitalize the economy, which experienced a significant slowdown in the second quarter and has been hampered by a corruption scandal impacting infrastructure investments.

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The Philippine economy grew 2.3 per cent in the second quarter from a year earlier, its weakest pace since 2021, due to a slump in construction and softer domestic demand.

The Philippine economy grew by a mere 2.3% year-on-year in the second quarter, its slowest pace since 2021. This sluggish performance, driven by a slump in construction and weaker domestic demand, brought the first-half growth to 2.6%, falling short of the government's target range of 3.5% to 4.5% for the year. The proposed budget is equivalent to 21.7% of the country's gross domestic product.

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Next year's proposed spending plan is equivalent to 21.7 per cent of gross domestic product, the Department of Budget and Management said.

Education is set to receive the largest share of the budget with 1.15 trillion pesos, although this represents an 11.5% decrease from the previous year. Funding for healthcare is allocated at 353.8 billion pesos, a 21% reduction, while agriculture funding is set at 261.7 billion pesos, down 13%. Conversely, the Department of Public Works and Highways, recently embroiled in an infrastructure scandal, will see its budget increase by 22% to 644 billion pesos. Defense spending is also slated for a 7.6% rise to 328.8 billion pesos.

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The government expects total disbursements of 6.9 trillion pesos in 2027, against projected revenues of 5.2 trillion pesos, resulting in a fiscal deficit of 1.7 trillion pesos to be financed through borrowing, Budget Secretary Kim Robert De Leon told a press conference.

According to Budget Secretary Kim Robert De Leon, nearly four-fifths of the budget increase will cover mandatory obligations, such as salary adjustments for military and uniformed personnel. The government anticipates total disbursements of 6.9 trillion pesos against projected revenues of 5.2 trillion pesos, resulting in a fiscal deficit of 1.7 trillion pesos to be financed through borrowing. The administration has set a GDP growth target of 5.0% to 6.0% for the period between 2027 and 2030.

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The government has set a GDP growth target of 5.0 per cent to 6.0 per cent for 2027 to 2030.