P118.5 billion a year lost to flood control corruption – DOF

MANILA, Philippines — Economic losses from corruption in flood control projects may have averaged P118.5 billion annually from 2023 to 2025, the Department of Finance reported yesterday at a Senate hearing.

Without these losses, Finance Secretary Ralph Recto said the economy could have expanded by as much as six percent.

“Raising revenues is no joke. Then you will see that it does not go to the right projects and the welfare of the people. Some even become non-existent. Because of ghost projects, our economy has lost P42.3 billion to P118.5 billion,” Recto said at the Development Budget Coordination Committee (DBCC) briefing at the Senate.

The Finance chief said the number of potential jobs could have ranged from 95,000 to 266,000, essentially enough to boost economic activity.

He said it was only now that they had been apprised of the extent of the flood control problem.

“Maybe if that money was spent better, we could have reached six percent. That’s the point,” he said, citing the impact on the economy of flood control project anomalies.

The Philippine economy expanded 5.4 percent in the first quarter of this year, and 5.5 percent in the second quarter.

In 2024, full-year GDP growth settled at 5.7 percent, higher than the 5.5 percent recorded in 2023.

For this year, as targeted by the Cabinet-level DBCC, growth is expected at 5.5 percent to 6.5 percent from the original target of six to eight percent. But Recto is optimistic that the growth target for the third quarter would still be achievable.

Also at the briefing, Recto said revenues lost this year, especially from smuggling of oil and general merchandize, stood at P150 billion for the Bureau of Customs.

“The last time we met with the new commissioner of the BOC, they presented us the catch-up plan and we presented to them our catch-up plan that I think they should do,” he said.

At a press briefing last July, the Finance chief said custom’s revenue target shortfall would be around P100 billion, partly due to rice tariffication and tax incentives granted to hybrid and electric vehicles.

The DBCC has slashed BOC’s revenue target for this year from the original P1.06 trillion to P990 billion due to lower tariffs and weak import.

Asked about potential losses from the suspension of rice importation, the Finance chief said losses would depend largely on the global prices of rice.

“I don’t look at it as expected losses because it depends on the volume, it depends on the price. The price is really going down. So there will be losses naturally, but the people will win because inflation is going down,” Recto said.

As ordered by President Marcos, a 60-day rice importation suspension took effect last Monday, until the end of October.

2026 NEP irregularities

Also at the DBCC briefing, Sen. Sherwin Gatchalian pointed to irregularities in the Executive department’s spending plan for the Department of Public Works and Highways (DPWH).

Gatchalian, who chairs the Senate finance committee tasked with defending the budget, cited the construction of flood mitigation structures along the Agno river in Rosales, Pangasinan – worth P50 million for each of four packages – funded in this year’s budget, but is again proposed next year under the National Expenditure Program (NEP), divided into four phases at P50 million each.

He also took note of the construction of flood control structure along the Agos river in Infanta, Quezon, funded with P200 million in the 2025 budget program and reappeared in the 2026 NEP, this time in General Nakar, Quezon.

“These are not clerical errors. These are deceptively and intentionally inserted in the NEP. The DBM (Department of Budget and Management) should do more and reform its process and analyze the details of the projects put in the NEP,” Gatchalian said.

Budget Secretary Amenah Pangandaman admitted her department does not have the expertise to verify the progress or existence of projects in the NEP.

For his part, Sen. Panfilo Lacson flagged at least P51.82 billion worth of vague, “distinct” insertions in the NEP, as he called for an executive session to ask for help from the DBM in his call for a realignment of the insertions.

Lacson said the public is faced with a “quadruple whammy” of budget insertions at all levels of the budget process – from the crafting of the NEP to the approval of the General Appropriations Bill and the GAA.

Congress tinkered with the budget because many of its members have links to government contractors, Lacson added.

“When contractors invade Congress and lawmakers invade the construction business, this is the outcome. The DPWH allows them to make insertions in the NEP,” Lacson said.

“Its impact on the Filipino is not just one, two or three whammies. It’s a quadruple whammy because insertions are made in the NEP, the House and Senate versions of the budget bill and the bicameral conference committee. It’s a quadruple whammy on Filipinos,” he added.

LGUs sidelined

Citing data from the DBCC, Lacson expressed disappointment over the low percentage of project proposals from local development councils reflected in the NEP for next year. He said this could indicate that plans of local government units are again being sidelined.

“I noticed that only 19.9 percent of projects proposed by the Local Development Councils were adopted in the NEP. It seems local development plans were neglected again,” Lacson said in Filipino at the hearing.

The senator said he had expected local development programs to make up the bulk of projects in the NEP – or at least 30 to 40 percent.

He attributed the low adoption rate to timing issues, as local development councils would submit proposals only by October, or months after the beginning of budget call in January. — Neil Jayson Servallos, Marc Jayson Cayabyab