CONGRESS should closely scrutinize proposed spending increases and shift funds away from underperforming government programs as slower growth, high inflation and rising debt leave less room for additional spending, accord-ing to the House of Representatives’ policy research arm.
The Congressional Policy and Budget Research Department (CPBRD) said lawmakers should also establish plans for which expenditures to protect, defer or cut if government revenues fall short or economic conditions worsen.
“With less room for fiscal expansion, greater emphasis should be placed on the composition, implementation readiness, and demonstrated effectiveness of public expenditure rather than on expenditure growth alone,” accord-ing to the September study authored by David Joseph Emmanuel Barua Yap, Jr.
The CPBRD said the proposed P7.2-trillion national budget might remain financeable under baseline assumptions, but cautioned that this does not mean the government has ample room to increase spending or that its finances are sustainable over the longer term.
“Financeability should therefore not be equated with the existence of ample fiscal space or with longer-term fiscal sustainability,” it said.
The CPBRD urged lawmakers to 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, it said.
The recommendations follow the Development Budget Coordination Committee’s May 25 decision to cut its 2026 gross domestic product growth target to 3.5%-4.5% from 5%-6%.
The weaker outlook translates to an estimated P350-billion loss in potential real economic output, according to the study.
Economic managers also raised their 2026 inflation forecast to 6%-7% amid higher oil prices, agricultural disruptions linked to El Niño and the war in the Middle East.
The CPBRD said government spending has also generated relatively limited additional economic activity in recent years, reducing the ability of spending increases alone to support growth.
Under moderately worse economic conditions, the study projected government debt to reach 67% of the economy by 2027. Under more severe conditions, it could rise to 70.7%.
The CPBRD said these risks make it necessary for Congress to establish clear contingency plans as it deliberates on the 2027 budget.
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, it said.
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. — Pexcel John Bacon