Analysts: Marcos veto curbs standby funds but deeper budget flaws persist

By Chloe Mari A. Hufana, Reporter

PRESIDENT Ferdinand R. Marcos, Jr.’s veto of P95.5 billion in unprogrammed funds from the 2026 General Appropriations Act has eased some concerns over discretionary spending, but analysts said the move only partly addresses deeper weaknesses in budget planning and oversight.

While the decision trimmed standby allocations, it left intact a system that allows large sums to be set aside without detailed projects or assured funding, an issue now before the Supreme Court (SC) and one that could shape future fiscal policy.

“The continued presence of large unprogrammed appropriations points to deeper issues in planning and coordination that need to be addressed more systematically,” Ederson DT. Tapia, a political science professor at the University of Makati, said in a Facebook Messenger chat.

He added that striking out items from the budget should not be treated as a substitute for broader reform.

Mr. Marcos signed the P6.793-trillion spending plan on Jan. 5, vetoing seven unprogrammed items worth P95.5 billion but retaining about P150.9 billion in standby funds.

He said this was the lowest level of unprogrammed appropriations since 2019. The retained amounts include P97.306 billion for support for foreign-assisted projects, P3.6 billion for a risk management program, and P50 billion for the Armed Forces of the Philippines’ modernization.

Unprogrammed funds are meant to be released only when excess revenues or foreign financing materialize. Critics, however, have long argued that they give the Executive branch wide discretion and weaken Congress’ power of the purse because projects are not fully specified at the time of approval.

Mr. Tapia said unprogrammed appropriations are not inherently flawed and are meant to provide flexibility in the face of uncertainty. The problem arises when they become a routine feature of the budget and discretion replaces careful planning.

The issue has taken on greater urgency after a multibillion-peso graft scandal involving flood control projects rattled public trust and investor confidence. Mr. Marcos has alleged that senior officials colluded with private contractors in kickback schemes linked to overvalued and underbuilt infrastructure.

Against this backdrop, minority lawmakers from the House of Representatives filed a petition before the Supreme Court last week questioning the constitutionality of unprogrammed appropriations.

The plaintiffs argued that authorizing spending without clearly defined projects or assured funding sources undermines legislative control over the budget.

Beyond the veto itself, analysts said attention is likely to turn to how such items entered the spending plan in the first place. Weak planning, political accommodation or forecasting gaps may all be contributing factors, Mr. Tapia said, adding that understanding these origins would be key as Congress and the Executive consider changes to future budget cycles.

Civil society groups said a court ruling could help settle longstanding issues. Judicial review of unprogrammed appropriations is important because questions persist over transparency, constitutionality and planning, Alce C. Quitalig, a senior budget specialist at Social Watch Philippines, said in a Viber message.

Mr. Quitalig said civil society had already scored a win after pork-linked allocations were stripped from the 2026 budget, pointing to the zero allocation for the Strengthening Assistance for Government Infrastructure and Social Programs.

He also raised concerns over the widening gap between unprogrammed amounts proposed by the Executive and those eventually approved by Congress. Between 2022 and 2024, the approved unprogrammed appropriations exceeded what was originally proposed, Mr. Quitalig said, echoing arguments raised in the SC petition filed by former congressman Edcel C. Lagman, Sr.

Such practices, he said, risk weakening fiscal discipline, especially as government spending continues to grow faster than revenues. Reliance on volatile nontax revenues to justify these allocations creates what the Supreme Court itself has called “artificial revenue surpluses,” Mr. Quitalig said, warning this could lead to higher deficits and borrowing.

Still, he acknowledged that the courts have recognized limited use of unprogrammed funds. They are not automatically unconstitutional, but reforms are needed to impose clearer limits on financing and releases, require itemized project listings and prevent Congress from shifting fully funded programs into unprogrammed items, he added.

“Ultimately, if certain programs are indeed a priority, these should be allocated under programmed appropriations,” Mr. Quitalig said. “Contingencies can and should be covered by programmed appropriations already available in agency budgets and special purpose funds.”