Philippines plugs scandals with fiscal fixes

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But watchdogs warn corruption may still leak

MANILA, Philippines — Almost a year after President Marcos scolded corrupt officials with a blunt “Mahiya naman kayo” as floodwaters swallowed towns and ghost projects surfaced, the government is still patching holes with new oversight tools, but watchdogs insist deeper reforms are overdue.

The administration had to be creative, deploying satellites and drones to verify construction progress, digital budget trackers to follow the money and a slew of tax evasion cases to claw back lost funds.

In a statement to The STAR, the Department of Budget and Management (DBM) said it has “long been pursuing comprehensive public financial management reforms” and that the uproar over flood-control projects has not derailed that mission.

If anything, it said, the controversy only reinforced the urgency of accelerating change.

“Rather than responding with isolated or reactive measures, the Department continues to advance a long-term reform agenda that modernizes public financial management, strengthens institutional safeguards, expands digital governance and promotes greater citizen participation in oversight,” the DBM said.

Among its key tools is the DBM Centralized Open Monitoring Platform for Appropriations and Spending Statistics, or DBM COMPASS, which allows the public to trace pesos from the National Expenditure Program down to actual disbursements.

This reform is crucial as the DBM is preparing to submit the proposed P7.2-trillion national budget for 2027.

Complementing it is Project DIME (Digital Information for Monitoring and Evaluation), which boosts monitoring of major government infrastructure projects, including flood-control projects.

It uses satellite imagery, drones, geotagging, geographic information systems and other digital technologies to conduct independent validation of infrastructure projects. This also allows citizens to access project information and provide feedback through its online platform.

The New Government Procurement Act was also implemented, which then Budget Secretary Amenah Pangandaman dubbed the “biggest anti-corruption law in modern times.”

The measure institutionalized open contracting, expanded digital procurement platforms like the eMarketplace and required disclosure of beneficial ownership to unmask the real players behind participating corporations.

Government accelerates budget release, safeguards

The government is racing to fast-track budget execution to revive an economy still reeling from the flood-control scandal and shocks from the Middle East war.

In May, the agency released P403.3 billion in allotments for Department of Public Works and Highways (DPWH) infrastructure projects, which it expects to “support the recovery of infrastructure expenditures in the succeeding quarters as projects move into implementation.”

The DBM said infrastructure spending is being buoyed by the rollout of flagship foreign-assisted projects and a growing pipeline of public-private partnership initiatives.

Still, infrastructure disbursements remained weak in the first four months of 2026, contracting by 45.6 percent to P189.30 billion from P347.6 billion a year earlier.

Officials said that once contracts are awarded, contractors may immediately access mobilization costs needed to commence construction activities, including equipment mobilization, site preparation and machinery installation.

“Likewise, progress billings for ongoing projects are expected to recover following the completion of the government’s mandatory review of infrastructure projects last year,” it said.

The DBM, previously criticized for failing to flag duplicate budget items and fund bogus infrastructure projects, introduced one of the most significant governance reforms under the 2027 Budget Call: the expanded role of Regional Development Councils (RDCs).

Under this, priority regional programs and projects must secure RDC endorsement before inclusion in agency budget proposals.

This improves coordination among national agencies, regional offices and local governments, ensuring investments are more responsive to local needs while aligned with national priorities.

“We believe that investor confidence is built not just on sound macroeconomic fundamentals but also on institutions that consistently demonstrate transparency, accountability, fiscal discipline and effective governance,” the DBM said.

Despite sweeping reforms, the DBM was rocked by allegations against Pangandaman, who was accused by fugitive ex-lawmaker Zaldy Co of inserting P100 billion worth of projects during the 2025 budget bicameral talks, allegations she denied.

Pangandaman later resigned, with veteran DBM official Rolly Toledo briefly stepping in before the post was eventually filled by University of the Philippines professor Kim Robert de Leon.

On the Department of Finance side, the country’s top revenue-generating agencies, the Bureau of Internal Revenue and the Bureau of Customs, took matters into their own hands to retrieve funds from contractors linked to ghost projects.

Apart from selling luxury cars and filing tax evasion cases against contractors, the government has so far collected P611 million in public funds linked to anomalous flood-control projects and deposited them in the Bureau of the Treasury.

The DOF last year estimated that the economic impact of corruption related to DPWH flood-control projects could have reached between P145.4 billion and P407 billion from 2023 to 2025.

This assumes that between 25 percent and 70 percent of the DPWH project costs were lost to corruption.

Bisto Proyekto

Outside the government, budget watchdogs are refusing to sit idle and have led collaborative efforts with the government. They said more reforms must be put in place to choke off potential avenues for corruption.

Civil society groups, the Catholic Church, business leaders and volunteers launched Bisto Proyekto, a citizen-powered platform to track and report on infrastructure projects.

In partnership with the DPWH, the initiative allows citizens to inspect flood-control and other projects and upload reports to bisto.ph.

From February to June, a total of 199 projects worth over P11 billion were inspected, according to Dondon Parafina, executive director of the Affiliated Network on Social Accountability in the East Asia Pacific Foundation Inc.

“Citizen feedback on infrastructure projects has been formally transmitted to the DPWH, some of which have led to concrete actions such as repairs, referral to concerned agencies and the exploration of filing cases with the Ombudsman,” Parafina told The STAR.

Expansion plans include monitoring public works projects under several government agencies.

These include farm-to-market roads under the Department of Agriculture, school buildings under the Department of Education, health facilities under the Department of Health and transport projects under the Department of Transportation, in partnership with DBM’s Project DIME.

However, the People’s Budget Coalition (PBC) said crucial reforms remain stuck in limbo, with the CADENA Bill and the Philippine Budgeting Code still awaiting enactment.

“Until these reforms are enacted and effectively implemented, many of the structural gaps that enable inefficiency and corruption will persist,” PBC Coordinator Abigail Modales said.

The Citizen Access and Disclosure of Expenditures for National Accountability Act, which has hurdled the Senate, seeks to use blockchain technology to make the budget process tamper-proof and fully accessible to the public.

Modales flagged the absence of institutionalized civil society participation, noting that budget consultations hinge on the goodwill of agencies rather than on guaranteed legal mechanisms.

“While there have been continuing efforts to improve public financial management systems, including the use of digital platforms and budget trackers, greater efficiency in releasing funds does not automatically translate to better governance,” she said.

She also said that citizens must have timely access to contract awards, project implementation and outcomes to allow both oversight bodies and the public to spot irregularities and hold officials and contractors accountable.

PBC co-convenor AJ Montesa also echoed the call, saying these reforms must be legislated.

“While opening up the budget process is a step forward, the real importance of institutional reforms is to cement transparency, accountability and genuine participation –not just as one-off, tokenistic concessions during periods of public backlash,” Montesa said.

Tim Salomon, project coordinator of the Caucus of Development Non-Government Organization Networks, urged the government to livestream all budget processes with greater civil society participation, as well as curb new ways to secure pork in next year’s budget.

He urged science-based project identification, citizen consultation in aid programs and limiting allocations for unprogrammed appropriations for foreign-assisted projects, or even reducing them to zero.

“For ayuda programs, citizens must be consulted on the guidelines for selection and targeting, while guarantee letters – a clear entry point for patronage – should be reduced in favor of technical assessments of indigency by accredited social workers and other accredited government personnel,” he said.

Salomon also called on Congress to end small “secret committees,” open deliberations to the public and ensure that civil society budget observers are considered resource persons at all stages of budget deliberations.

For its part, the DBM said it continues to advance participatory governance through the Philippine Open Government Partnership.

“The Department regularly brings together civil society organizations, development partners, academia and other stakeholders to discuss macroeconomic assumptions, expenditure priorities and fiscal governance reforms,” it said.

Consultations help make the budget process more transparent, inclusive and responsive while promoting shared accountability in the management of public resources, the DBM said.