Floods and money

Two apparently unrelated events:

1. The Philippines is No. 1 in the world in terms of being prone to natural disasters, by a wide margin, over No. 2 India and No. 3 Indonesia.

“Global risk drivers include social inequality, structural vulnerability and weak health systems. These reduce adaptability and resilience – even in wealthy countries, for example, through austerity measures in key societal sectors,” reports the WorldRisk 2025.

The No. 1 natural disaster is flooding. Floods are 44 percent of all natural disasters.

2. The Philippine economy is also facing a disaster of a different kind – the deepest quarterly growth slump in three years; some say in 11 years, excluding COVID years.

The Gross Domestic Product (GDP), the value of goods and services produced in a given period, grew by just four percent in the third quarter, July-September 2025, below the 4.3 percent GDP rate in the second quarter (April-June) of 2022, just before Ferdinand R. Marcos Jr. took office. And the worst is still to come. Or maybe not, if the President executes some creative countermeasures.

Two factors are blamed for the steep drop in economic growth. Flood control corruption. Consumers are in no mood to spend, disturbing given that the “ber” shopping season is upon us.

The economy is powered by consumption, not production. We don’t manufacture anything significant – except ghost projects (with tons of falsified documents) and 1.8 million babies a year, many of whom grow up to age 15 without knowing how to read, how to write and how to count beyond 20.

In third quarter 2025, growth in government spending or consumption fell to 5.8 percent, from 18.7 percent in first quarter 2025, the height of the election campaign. Still, the 5.8 percent growth is double the measly 2.6 percent growth in first quarter 2024, and far better than the negative 1.3 percent in Q4 of 2023.

“Economic growth is driven by government construction (infrastructure) and consumption spending. Take those away or drastically reduce them and the economy grinds to a halt,” says Cielito Habito, a former economic planning secretary.

“The slowdown came not from lack of funds or demand, but from hesitation,” contends former Albay congressman Joey Salceda, a topnotch analyst.

“Services expanded 5.5 percent, agriculture 2.8 percent, industry only 0.7 percent. Within construction’s 0.5 percent decline, government construction plummeted 26.2 percent while private construction surged 14.4 percent. Gross capital formation fell 2.8 percent after growing 12.8 percent a year earlier. The government kept paying salaries but stopped building. On top of this general air of paranoia, around P100 billion in For-Later-Release (FLR) funds sits idle,” he notes.

In the May 2025 elections, Salceda lost his bid for governorship by 1.2 percent, after contractors ignored his candidacy. The winner, Noel Rosal, however, was later disqualified, after his proclamation. So Salceda, who had never lost an election, still could not succeed, on a technicality; his petition against Rosal’s disqualification was not filed on time. Such are the vagaries of flood control politics.

Joey is back to the business he knows best – analysis. He thinks the Department of Public Works and Highways, the government’s biggest spender (over P1 trillion a year), is in paralysis mode. And that is bad for the economy.

Construction or infra is a business that feeds 17 other industries or businesses. Like cement, asphalt, steel, wood, housing, food, appliances, vehicles, shopping, malls, new cities and towns and, of course, banking. Corrupt DPWH engineers and contractors move cash in the hundreds of millions and billions, never mind AMLAC. Ask the marines. All these create economic activities and jobs.

Because of ongoing crackdown against massive corruption at the DPWH, nobody takes the initiative, nobody signs papers, nobody authorizes projects. A natural reaction when everyone is suspected to be a thief. Even recently installed DPWH Secretary Vince Dizon admits, “Every day I discover a miracle (of wrongdoing).”

Vince, however, denies DPWH is in paralysis mode. “We are on track with our projects,” he assured, replying to my text query. “Yung mga usual suspects syempre umiiwas na sir pero tuloy-tuloy po kami.” (Of course, the usual suspects are avoiding notice, but we just carry on).

“Everything slowed after the flood control investigations began,” insists Joey Salceda. “Not just DPWH, but every agency that approves, certifies or releases funds. The paranoia about who’s next on the chopping block spreads through the entire system. In a low-trust system, almost no one operates entirely by the book. Even the most virtuous businesses will admit privately that almost everyone has bent the system’s rigidities, not necessarily corruptly, but to get things done fast.”

Joey suggests two things:

One, proceed with priority projects. “Government must define which projects may proceed, which are under review, which are suspended. Timelines must be fixed and public. FLR projects should not be held as a single, blocked item.”

“A safe harbor policy will provide a sense of assurance for officials who just want to do their jobs. By making clear what conditions are required so that a project is not considered suspect, things can move. Cases with credible irregularities should be suspended specifically, not systemically,” says Joey.

Two, download aid to the masses.

Joey: “If we insist on freezing infrastructure, we must compensate through aid. The series of natural disasters provides clear need. When people see billions for flood control while communities remain flooded, they demand accountability. But if pursuing accountability freezes infrastructure, we must keep money flowing another way.

“Disaster aid bypasses the paralyzed bureaucracy through different channels and emergency procedures. The P100 billion sitting idle could be redirected to disaster response.”

Curiously, President Marcos has declared a nationwide state of calamity, for one year. This means all provinces and cities, LGUs, can tap into their calamity funds, usually 15 percent of their budget.

LGUs are rich. They have 40 percent or P1.2 trillion of total internal revenues of P3 trillion. Get 15 percent of P1.2 trillion, that’s P180 billion, enough to metamorphose calamity into – Christmas!

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