Government warned against spending cuts

Economists from De La Salle University (DLSU) urged Philippine government officials to sustain public spending despite ongoing corruption investigations, warning that overly cautious fiscal policies could perpetuate decades of underinvestment.

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"The ugliest outcome from this historical moment would be for bad governance to be compounded by craven economics," said DLSU economists Jesus Felipe, Gerardo Largoza, and Mariel Monica Sauler in a 10-page commentary titled "The bad, the ugly, and the possibly good about flood control corruption."

"That is, if well-meaning lawmakers and economic planners fear fiscal collapse so much they're happy to continue a decades-long pattern of public underinvestment," they said, pointing out that "no country has ever been able to increase national productivity—the one driver of development that matters—without significant spending on public goods."

Philippine Statistics Authority (PSA) data released last week showed that the third-quarter gross domestic product (GDP) growth rate of four percent marked the steepest slowdown in more than four years—the weakest since the 3.8-percent contraction in the first quarter of 2021 during Covid-19 lockdowns—with the government's continued underspending cited as one of several factors contributing to the slowdown.

Department of Economy, Planning, and Development (DEPDev) Secretary Arsenio M. Balisacan noted that there has been significant underspending in key government priority areas this year, especially after the flood control corruption scandal erupted.