The proposed 2026 national government budget is unfortunately not the budget the country needs amid slowing growth, increasing poverty and worsening hunger.

Budget inhibitions

The Php6.79 trillion national budget for 2026 may sound large, but the 7.4% increase from last year is actually lower than the 9.7% growth in 2025 and far below the historical average of 10.6% over the last 40 years. Economic growth is already slowing this year as it is, despite relatively high government spending. An even weaker fiscal stimulus next year will just make the economy drag even further.

It is long overdue for the government to prioritize pro-poor and pro-middle-class spending on publicly provided services like health, education, housing, and social protection. Such high-yield, high-multiplier investments will give immediate relief to tens of millions of Filipinos facing growing poverty and hunger, even in the context of slower inflation and worsening job quality. Because these social services are labor-intensive, they will create jobs while laying the foundation for more universal access and stronger social safety nets.

Educate, heal, help

The significant increase in the education sector is welcome because it reflects higher pay for teachers. For instance,the Department of Education (DepED) budget for personnel services will rise by almost 20% to Php704.6 billion in 2026. The number of teaching personnel remains unchanged though, while the infrastructure budget for school buildings barely increases to Php46.3 billion, which is not even 3% of the total infrastructure program. This means that while teachers may see higher pay, stagnant hiring and underfunded school facilities will continue to strain workloads and limit students’ learning environments.

More education spending is still warranted. Public education is a high-yield public investment that creates jobs, improves worker productivity, and supports higher and equitable growth. This can also be linked to an industrial strategy with more spending on technical and vocational training linked to manufacturing clusters.

In terms of the health sector, poverty and hunger stoke ill-health, but the 5% increase in the Department of Health (DOH) budget to Php267.2 billion in 2026 is marginal. Also, the over 40% cut in medical assistance for indigents to Php24.2 billion casts doubt on the president’s promise of free healthcare made during his last State of the Nation Address (SONA). The overall health budget increases primarily because the PhilHealth subsidy was reinstated. But at just Php53.3 billion, it is only about half of the almost Php100 billion in 2023.

Some 43% of total health spending is still out-of-pocket. If the president’s much-applauded promise for free healthcare is to be taken seriously, the government’s health budget must increase from just 1.1% to 3% of gross domestic product (GDP), or around Php720 billion in 2026. This would go far in making healthcare universal, creating jobs, and boosting both short- and long-term growth, especially if it is spent on building public hospitals and hiring doctors and health workers.

Social welfare spending also hardly budges, increasing by just 4.2% to Php295.8 billion, which is not enough to avert increasing social distress. The budget for the Pantawid Pamilyang Pilipino Program (4Ps) doubles to Php113 billion, merely reverting to previous levels after the large cut in 2025 to accommodate discretionary ayuda programs in aid of electoral campaigns. The 4Ps was already at Php106.3B in 2024, so the restoration in 2026 is not exceptional.

Meanwhile, funding for the Tulong Panghanapbuhay sa Ating Disadvantaged/Displaced Workers (TUPAD) program is down substantially to Php11 billion in 2026 from its peak of Php29.6 billion in 2024. Social pensions for seniors have also been slightly reduced to Php49 billion in 2026. Yet cash transfers, pensions, and unemployment support, alongside public investment in care services, could greatly support aggregate demand and substantially spur economic growth.

Plant, build, multiply

The increase in the Rice Competitiveness Enhancement Fund (RCEF) to Php30 billion in 2026 from Php10 billion is important and clearly a response to mounting public criticism. However, it is concerning  that despite this high-profile increase, the agriculture sector as a whole remains underprioritized,  accounting for just 3.8% of the total budget. This is because the hike to Php256.5 billion in 2026 is just incremental and insufficient for all the extension, irrigation, public procurement, and rural infrastructure needed to raise productivity and rural incomes, make food cheaper, and reduce dependence on food imports.

The 2026 budget also lacks meaningful fiscal support to build Filipino industrial micro, small and medium enterprises (MSMEs) and national champions as part of an industrialization package of subsidies, technology acquisition, and protection. The Php16 billion for the trade and industry sector in 2026 is not even one-fourth of one percent (0.24%) of the national budget and an inconsequential 0.1% of GDP. The government needs to take on a more active domestic industrialization policy instead of its over-reliance on attracting low value-added enclave foreign investments.

While the cut in the infrastructure budget to Php1.56 trillion in 2026 from the Php1.64 trillion this year is a step in the right direction, it is too small to change the overly capital-intensive bias and pork barrel-heavy tendencies of government spending.

Bolder spending on people is better. This has larger, more widely spread and more durable multiplier impacts than spending on hard infrastructure projects, which are import-heavy and prone to leakages from overpricing and corruption. They also take longer to develop and their benefits are not immediately seen.

Social sector activities are invariably more labor-intensive than capital-intensive infrastructure. Thus, budgets spent on health workers, teachers, and social protection, will flow quickly to local economies. This is because the poor and middle class tend to spend more of their income compared to high income groups. Their multiplier impact becomes even wider if free from corruption and linked to domestic industry supply chains.

Debt, defend, spend for whom?

Unproductive debt service continues to be guaranteed, with the Php102 billion increase in interest payments to Php950 billion, surpassing the combined increases in health, housing and social security and welfare. There is also another Php1.1 trillion for principal amortization, bringing total debt service in 2026 to over Php2 trillion.

Substantial fiscal space can be created from negotiating or even unilaterally declaring debt relief or cancellation. Moreover, the government should heed the growing public clamor for progressive revenue measures like billionaire wealth taxes and higher income taxes on super-rich families and large corporations. This will also enable a shift away from regressive consumption taxes that disproportionately burden the poor and middle-class.

The 14% hike in defense spending to Php430.9 billion in 2026 is conspicuous, making the 2026 defense budget already one-and-a-half times larger than its Php278.1 billion level just two years ago in 2024. This increase plausibly reflects United States (US) pressure following the US-RP Bilateral Defense Guidelines agreed upon in May 2023. The guidelines include a provision for the Philippines to “coordinate closely [with the US on] defense budget planning [to] identify priority defense platforms and force packages over the next five years to bolster our combined capabilities and capacity.” These also commit the Philippines to “prioritize the procurement of interoperable defense platforms [sourced] from various US programs”.

The budgets for education, health, housing and social protection are hyped as big, but are still very far below what the poor and middle-class need. Agriculture and especially small Filipino firms are also left far behind. Meanwhile, local and foreign big businesses get the infrastructure and projects they want, growing debt service is guaranteed over social needs, and the US gets defense spending that serves its geopolitical rivalry with China.

In short, the president’s 2026 budget is still crafted for the super-rich and powerful, not the people.