Analysts: Marcos veto closes standby funds but deep budget errors persist

By Chloe Mari A. Hufana, A reporter

PRESIDENT Ferdinand R. Marcos, Jr. The President’s vote of P95.5 billion in unplanned funds from the General Appropriations Act of 2026 eased some concerns about discretionary spending, but analysts say the move only addresses deep weaknesses in budget planning and oversight.

Although the decision fixes the earmarks, it left intact the system that allows large amounts of money to be earmarked without detailed projects or guaranteed funding, an issue that is now before the Supreme Court (SC) and one that could shape future fiscal policy.

“The continued presence of large unplanned assignments points to deeper issues in planning and communication that need to be addressed systematically,” Ederson DT. Tapia, a professor of political science at the University of Makati, said in a Facebook Messenger chat.

He added that removing items from the budget should not be taken as a substitute for broader reforms.

Mr. Marcos signed the P6.793-trillion spending plan on January 5, vetoing seven unplanned items worth P95.5 billion but retaining about P150.9 billion.

He said this is the lowest level of unplanned budget since 2019. The reserved amounts include P97.306 billion for foreign aid projects, P3.6 billion for the risk management program, and P50 billion for the development of the Armed Forces of the Philippines.

Unplanned funds are intended to be released only when excess revenue or external funding is identified. Critics, however, have long argued that they give the executive branch broad discretion and weaken the power of Congress because projects are not fully specified at the time of approval.

Mr. Tapia said random allocations are inherently foolproof and are meant to provide flexibility in the face of uncertainty. The problem is when it becomes a regular feature of budgeting and discretion takes the place of careful planning.

The issue has become more urgent after the multi-billion peso fraud involving flood control projects has undermined public trust and investor confidence. Mr. Marcos alleges that top officials partnered with private contractors in backlog projects linked to cheap and poorly constructed infrastructure.

In opposition to this, several lawmakers in the House of Representatives filed a petition with the Supreme Court last week questioning the constitutionality of unplanned funds.

The plaintiffs argue that authorizing spending without clearly defined projects or guaranteed funding sources undermines official control over the budget.

Apart from the veto itself, analysts say it is possible to look at how such things got into the spending process in the first place. Weak planning, political settlements or forecast gaps may be contributing factors, Mr. Tapia said, adding that understanding this background will be key as Congress and the executive branch consider changes in future budget cycles.

Civil society organizations said the court’s decision could help resolve long-standing problems. The judicial review of unplanned allocations is important because questions persist over transparency, constitutionality and planning, Alce C. Quitalig, senior budget expert at Social Watch Philippines, said in a Viber message.

Mr. Quitalig said that civil society organizations have already succeeded after the appropriations linked to pork were taken away from the 2026 budget, pointing to the zero allocation of Aid to Strengthen Government Infrastructure and Social Programs.

He also expressed concern over the widening gap between the unplanned rates proposed by the Executive and those finally approved by Congress. Between 2022 and 2024, the unplanned authorized quota exceeded what was originally proposed, said Mr. Quitalig, echoing the arguments raised in the SC petition filed by former congressman Edcel C. Lagman, Sr.

Such practices, he said, risk weakening fiscal discipline, especially as government spending continues to grow faster than revenue. Relying on variable nontax income to justify these dividends creates what the Supreme Court itself has called “artificial surpluses,” Mr. Quitalig, warning that this could lead to more deficits and borrowing.

However, he acknowledged that the courts have seen limited use of unplanned funds. They are not automatically unconstitutional, but changes are needed to set clear limits on funding and spending, require written project listings and prevent Congress from turning fully funded programs into random items, he added.

“Finally, if certain programs are really important, these should be allocated under the planned allocations,” said Mr. Quitalig. “Emergencies can and should be combined with planned budgets that are already available in agency budgets and special purpose funds.”