Think tank urges tighter 2027 budget scrutiny - BusinessWorld Online
Congress is being urged to exercise greater scrutiny over proposed spending increases in the 2027 budget and reallocate funds away from government programs that are underperforming. This call comes from the Congressional Policy and Budget Research Department (CPBRD), the policy research arm of the House of Representatives, in light of slower economic growth, high inflation, and rising debt levels that are leaving less room for additional spending.
Budget Scrutiny Necessary
The CPBRD has suggested that lawmakers should establish plans for which expenditures to protect, defer, or cut if government revenues fall short or economic conditions worsen. According to a September study authored by David Joseph Emmanuel Barua Yap, Jr., with less room for fiscal expansion, greater emphasis should be placed on the composition, implementation readiness, and demonstrated effectiveness of public expenditure rather than on expenditure growth alone.
Fiscal Sustainability Concerns
The CPBRD noted that the proposed P7.2‑trillion national budget might remain financeable under baseline assumptions. However, this does not mean the government has ample room to increase spending or that its finances are sustainable over the longer term. Financeability, the department warned, should not be equated with the existence of ample fiscal space or with longer‑term fiscal sustainability.
Evaluating Agency Proposals
Lawmakers are being urged to assess agency proposals based on objectives, capacity to implement projects, historical use of funds, results, and expected economic and social benefits. Programs that consistently encounter implementation problems or show little evidence of effectiveness should be restructured, scaled back, or have their funding redirected, while effective programs and those deemed priorities should be protected.
Economic Outlook and Risks
The CPBRD’s recommendations follow the Development Budget Coordination Committee’s May 25 decision to lower its 2026 gross domestic product growth target to 3.5%‑4.5% from 5%‑6%. The weaker outlook translates to an estimated P350‑billion loss in potential real economic output. Economic managers also raised the 2026 inflation forecast to 6%‑7% amid higher oil prices, agricultural disruptions linked to El Niño, and the war in the Middle East.
Debt Projections and Contingency Plans
The department observed that government spending has generated relatively limited additional economic activity in recent years, reducing the ability of spending increases alone to support growth. Under moderately worse economic conditions, the study projects government debt to reach 67% of GDP by 2027; under more severe conditions, debt could climb to 70.7%. These risks, the CPBRD said, make it necessary for Congress to establish clear contingency plans as it deliberates the 2027 budget. Lawmakers should decide in advance which expenditures would be protected if revenues fall below target, which programs could be delayed or reduced, and what other adjustments would be required if economic conditions deteriorate.
Source: bworldonline.com · 2026-09-16