By Justine Irish D. Tabile, Senior Reporter
Government agencies recorded a budget utilization rate of 42.2% in January, down from 78% last year, the Department of Budget and Management (DBM) said.
In a report on the use of the Notice of Cash Allocations (NCAs), the Department of Finance said that agencies spent a total of P136.29 billion during the month from NCAs worth P322.67 billion issued during that period.
Unused NCAs amounted to P186.38 billion, as of the end of January.
NCAs are quarterly disbursement authorities issued by the DBM to the posts, which allow them to disburse funds to the Bureau of the Treasury for their spending needs.
In January, operating departments spent P132.87 billion, or 62.7% of their allocations, while P79.17 billion remained unused.
The Electoral Commission set a record high of 97.6% at the end of January.
This was followed by the Audit Commission (95.1%), the Ministry of Foreign Affairs (90.9%), the Ministry of Tourism (89.5%), and the Ministry of National Defense (78.7%).
The Department of Labor and Employment set a minimum utilization rate of 20.2% at the end of January.
Other departments with low usage rates are the Office of the Ombudsman (31.6%), the Department of Justice (31.9%), the Office of the Vice President (34.8%), and the Department of Information and Communications (38.3%).
Budget support to state-owned firms, amounting to P3.36 billion, was fully utilized by the end of January.
Allocations given to local government units (LGUs) were only spent at 0.1%, while the Metropolitan Manila Development Authority had a 30% spending rate.
Budget watchdog Social Watch Philippines (SWP) attributed the low level of spending in January to the delay in the signing of the 2026 General Appropriations Act (GAA).
“The implementation of the budget depends on two major factors: the absorption capacity and expertise of the agency, and the timing of the allocation and disbursement of funds issued by the DBM,” SWP Senior Budget Analyst Alce C. Quitalig said in a Viber message.
“The delay in signing the 2026 GAA may have contributed to the low implementation of the NCA at the end of January 2026, which is mainly driven by the 0.1% budget release to LGUs, especially in the National Tax Allocation (NTA),” he added.
He said a similar incident occurred in 2019, when only 0.2% of the NCA was allocated to LGUs in the first month of that year.
“But the allocation to the LGUs usually records more than 90% spending in some years. The year-on-year decrease is due to the unspent funds of the LGU,” he added.
Meanwhile, Mr. Quitalig said the 62.7% utilization rate among national government agencies, which was below the 70% seen in January 2025 is consistent with a four-year average of 63% and a history of low utilization of just over 60% since 2016.
“The figures for the end of January should be viewed in context, however, as agencies are still setting spending plans at the beginning of the year. NCA spending tends to improve in successive months, as evidenced by the cumulative NCA monthly NCA spending flow,” said Mr. Quitalig.
“But the departments and agencies working continuously in January should strengthen their spending, especially on general programs, projects, and activities, to ensure the delivery of public goods and services on time,” he added.
However, Mr. Quitalig raised concerns that the government’s spending-enhancement programs have actually strengthened the agency’s ability to acquire knowledge and expertise or have hindered its financial performance.
“Analysis of budget changes aimed at accelerating the use of public funds is important. Although budget use is understandably low in the first month of the year, improvement should have occurred after the pandemic,” he said.
“Yet the constant use of NCA at the end of January which is still under the departments and agencies raises doubts about the effectiveness of programs to improve the use of funds such as the budget based on the income, the GAA document issued and the policies of early procurement,” he added.
Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said the low level of spending is due to the spillover effects of government spending from the last half of 2025 due to the extraordinary flood control projects.
“There are still warnings about government spending to prevent the risk of corruption,” he said in a Viber message, but he noted that the national budget signed on January 5 was based on better management standards compared to previous years.
“Going forward, government spending is expected to reach, especially in infrastructure to recover unused funds in the second half of 2025, but, more importantly, based on anti-corruption measures and better governance standards,” he added.
However, John Paolo R. Rivera, senior research fellow at the Philippine Institute for Development Studies, said the low level of consumption in January is not unusual.
“It could be caused by several factors such as post-holiday normalcy, weak new orders, input and cost pressures, and external uncertainty,” he said in a Viber message.
“At 42.2%, consumption is not shocking … it’s a normal decline,” he added.
