Cheap loans, costly budget failures

That is not fiscal prudence. Cutting appropriations for projects already backed by financing agreements simply moves costs elsewhere—and makes them bigger.

Manila Bulletin earlier reported that of 61 official development assistance (ODA) projects approved by the interagency Investment Coordination Committee (ICC), only 17 remained on schedule at end-2024. The other 44 suffered delays averaging up to 39 months.

Those delays cost taxpayers even when nothing is being built. Commitment fees on undrawn loans reached $16.8 million, or about ₱1.05 billion, in 2024, up 25.2 percent from $13.43 million in 2023. From just $584,000 in 2017, such payments have risen by an average 70.5 percent annually.

Filipinos are therefore paying for the privilege of not using money already available for projects they badly need.

The missed opportunity is greater because the DBCC itself describes ODA as the “most cost-effective financing option” for the administration’s flagship Build Better More (BBM) infrastructure program. These loans offer the cheapest and longest-tenor financing available, alongside technology transfer from bilateral partners as well as multilateral development banks (MDBs). Their long maturities also help limit refinancing risks.

This matters when fiscal space is tight and government debt is elevated. In 2025 alone, the government obtained ₱351.3 billion in ODA for key infrastructure projects and priority programs.

The country cannot afford to squander such financing through a budget process that approves projects with one hand and starves them of implementation funds with the other.

The stakes go beyond accounting. Major transport infrastructure, including railways, can reduce commuting time, improve the movement of goods and workers, as well as lower business costs. The government’s infrastructure pipeline includes enormous undertakings such as the North-South Commuter Railway (NSCR) and Metro Manila Subway.

Getting infrastructure built on time becomes even more important as geopolitical tensions push up energy costs, inflation, and uncertainty. Every unnecessary year of delay postpones the economic benefits for which the country borrowed in the first place.

Worse, Congress’ cuts to FAP allocations have forced the government to resort to unprogrammed appropriations (UAs) for approved loan proceeds. The DBCC warns that, unlike ordinary UAs backed by excess revenues or new income sources, these claims have deficit implications and increase government borrowing.

Congress must therefore treat funding for approved FAPs not as convenient material for budget cuts and realignments, but as commitments demanding disciplined scrutiny as well as predictable financing. The executive branch, for its part, must ensure agencies are ready to implement projects, acquire right-of-way (ROW), as well as meet procurement and other requirements without avoidable delay.

As Congress deliberates on the record-high ₱7.2-trillion national budget for 2027, lawmakers must not repeat the budgeting failures that left approved FAPs starved of funds, years behind schedule, and accumulating fees for loans the country was unable to fully use.

With cheap, long-term development financing increasingly valuable amid constrained fiscal space, the government should not borrow today only to pay penalties tomorrow for projects it failed to build.

Accountability for infrastructure does not end when a ribbon is cut. It begins when public money is budgeted.