THE Department of Finance (DOF) said the Philippines’ weaker-than-expected four percent economic growth in the third quarter of 2025 was a temporary slowdown caused by underspending, adding that the government expects activity to rebound next year as fiscal reforms and infrastructure spending catch up.
Finance Secretary Ralph Recto said the deceleration in public expenditure was partly due to a cleanup of alleged irregularities in flood control projects, which he said reflects the administration’s “resolve for good governance” and a shift toward more efficient use of funds.
“This short-term adjustment will pave the way for more efficient, transparent and accountable public spending moving forward,” Recto said in a statement on Friday, Nov. 7, 2025.
He said cases have been filed against those allegedly involved in the flood control corruption controversy and funds are being redirected toward higher-impact programs such as education, healthcare, agriculture and digitalization.
Recto said the government has introduced “catch-up measures” to align spending with national priorities, noting that P1.307 trillion in disbursements programmed for the fourth quarter will serve as a fiscal boost to close out the year. Most of the spending will go to social services.
The finance chief added that the Bangko Sentral ng Pilipinas (BSP) has provided timely monetary support through a policy rate cut last month, helping offset the slowdown in government expenditure.
“We already anticipated a temporary slowdown, which is why the BSP cut policy rates last month to help stimulate economic activity,” Recto said.
He maintained that the country’s economic fundamentals remain strong, with inflation easing and fiscal and governance reforms taking effect, positioning the economy for a “robust comeback” in 2026.
President Ferdinand Marcos Jr. has directed agencies to accelerate budget execution and improve infrastructure spending efficiency to support a broader recovery. / KOC