By Chloe Mari A. Hufana, Reporter

PHILIPPINE President Ferdinand R. Marcos, Jr. on Tuesday approved the proposed P6.793-trillion national budget for 2026 that the Executive branch will submit to Congress later this month.

The national expenditure program (NEP) reflects the government’s commitment to boosting education and driving inclusive economic growth, Palace Press Officer Clarissa A. Castro told a news briefing.

The Department of Budget and Management (DBM) said in a separate statement on Tuesday that the proposed 2026 budget is higher by 7.4% from this year’s budget of P6.326 trillion.

The proposed P6.793-trillion budget is equivalent to 22% of the country’s gross domestic product (GDP). Economic managers are targeting 6-7% GDP growth for 2026 through 2028.

The 2026 NEP is expected to be submitted to Congress within 30 days after the opening of the regular session on July 28.

Budget Secretary Amenah F. Pangandaman said the details of the budget proposal are still being finalized.

Allocations for key sectors, such as education, defense, and agriculture, will increase for next year, she said in a Viber message.

“The President himself sat down with the different agencies to ensure that all our priorities are aligned towards our common goal of achieving our vision of a Bagong Pilipinas,” Ms. Pangandaman said in a separate statement.

The DBM said that it had initially received budget proposals totaling P10.101 trillion but had to cut these due to “limited fiscal space and the fiscal consolidation strategy.”

The DBM said it had considered budget submissions based on several criteria: alignment with the Philippine Development Plan 2023-2028; “shovel-readiness”; absorptive capacity of agencies; and prioritization of programs that deliver the “highest value and impact.” It also took into consideration the implementation of sustainable practices and the government’s fiscal space when evaluating the proposals.

The Marcos administration is targeting to gradually cut the fiscal deficit from 5.5% of GDP in 2025 to 4.3% by 2028.

By expense class, the DBM said the largest share of next year’s proposed budget will go to maintenance and other operating expenses at P2.639 trillion to support the implementation of government programs and projects.

Personnel services expenditures will increase by 16.8% to P1.908 trillion next year, representing 28.1% of the proposed NEP. This covers salaries, benefits, and the creation and filling of government positions.

Only P1.296 trillion will be allotted for capital outlays to fund priority infrastructure projects. Financial expenses will receive P950 billion to cover government financial obligations.

Of the total budget, National Government agencies will receive P4.305 trillion (63.4%) while local government units will get P1.35 trillion (20%). Government-owned or -controlled corporations (GOCCs) will be allocated P188.3 billion in subsidies or equity support as well as net lending assistance.

Reinielle Matt M. Erece, an economist at Oikonomia Advisory and Research, Inc., said an ample national budget can drive economic growth.

“This is as the government plays a role in empowering households through assistance and development programs as well as in developing infrastructure to support productivity,” he said via Viber.

However, Mr. Erece noted the impact of an increasing budget would depend if it increases productivity.

“If it does, we may expect debt burden to slowly go down as better economic conditions may also result in higher tax revenues if businesses and households are earning well,” he said.

“In addition, reducing red tape and improving government efficiency are ways for the government to reduce costs and needed borrowings and be able to focus more on developmental and social programs.”

Jose Enrique “Sonny” A. Africa, executive director of economic think tank IBON Foundation, said the 7.4% increase in the proposed 2026 NEP is “too small for the bold response needed in the face of the continuing domestic economic slowdown and mounting global turmoil.”

“The government has to spend more and on the right things for the stability that really matters in agriculture, Filipino industry, and social services for all those in need,” he said in a Viber chat.

“A narrow-minded avoidance of progressive taxes places the burden of fiscal consolidation on the poor and middle-class through higher consumption taxes and inadequate social services, made worse by spending skewed towards pork barrel projects, inappropriate infrastructure, and bloating debt service.”