Reenacted budget poses risks to economy – DEPDev

MANILA, Philippines — A reenacted budget in 2027 would pose risks to the economy, the Department of Economy, Planning and Development (DEPDev) warned, even as it sees such reenactment as unlikely.

“We don’t like a reenacted budget,” DEPDev Undersecretary Carlos Abad Santos told reporters last week, citing its impact on the economy.

A reenacted budget happens when Congress fails to pass the General Appropriations Act before the new fiscal year starts. Under this scenario, the government continues operations using the previous year’s budget until the new GAA is signed into law.

As the proposed 2027 budget of P7.2 trillion is higher than this year’s budget and government spending plays an important role in driving economic growth, Abad Santos said that a reenacted budget would limit spending.

“Government spending is a big part of GDP (gross domestic product). And then the multipliers of the investments, of the public investments are also important. So there is an impact (on the economy),” he said.

He also said that a reenacted budget would affect the government’s ability to spend efficiently.

“So the problem there is you also have an opportunity cost,” Abad Santos said.

While a reenacted budget is expected to affect the country’s economic performance, he said that it is a remote possibility.

“I don’t think it (reenacted budget) will happen,” he said, citing the importance of the budget in driving economic growth.

While deliberations on the budget may take longer, he said that the government is unlikely to allow a reenacted budget for next year.

“I’m sure the Senate will be working overtime for that budget. I personally don’t believe it will be reenacted,” he said.

Earlier, Senate President Sherwin Gatchalian said that the Senate’s goal is to avoid a reenacted budget given the country’s slow economic growth.

The economy grew by 2.3 percent in the second quarter, its slowest pace in five years.

From January to June, the economy grew by 2.6 percent, below the government’s 3.5 to 4.5 percent growth target for the year.

Earlier, concerns were raised on possible delays in budget deliberations and legislative output amid the impeachment proceedings.

Last week, 35 business and civil society groups urged Congress to remove baseless insertions in the proposed 2027 outlay and pushed for its timely passage to avoid a reenacted budget.

The joint call to Congress was prompted by concerns on insertions amounting to over P180 billion in the proposed budget of the Department of Public Works and Highways, which is at the heart of the flood control controversy.

The groups also expressed concern as these insertions are to be funded through cuts in the allocations for foreign-assisted projects, calamity funds, the EDSA Busway and health programs.

For the first days of this year, the government had operated under a reenacted budget as the 2026 GAA was signed into law only on Jan. 5.