Prolonged Middle East war could force PH to cut projects, tap savings

The current conflict in the Middle East is costing the Philippines an estimated P70 billion to P85 billion monthly, according to the Senate Committee on Finance, and the Senate Proactive Response and Oversight for Timely and Effective Crisis Strategy (PROTECT) Committee Chair Sherwin Gatchalian.

Speaking during a recent PROTECT Committee hearing, Gatchalian pointed out that around P238.6 billion has been allocated from the 2025 Continuing Appropriation and the 2026 General Appropriations Act. However, he warned that the available funds may only last a few more months at the current rate of spending.

“If you divide 238 billion by P70 billion, that’s three and a half months. Eh nakalagpas na tayo ng isang buwan. So in other words, to exhaust the 238, two and a half months na lang natitira. Correct? More or less lang,” Gatchalian said. “Anything beyond that gagalaw na tayo ng ibang items,” he added.

Department of Economy, Planning, and Development Secretary Arsenio Balisacan clarified that the figures cited refer only to fiscal costs, noting that the broader economic impact would be significantly higher. “Economic cost would be much, much more,” Balisacan said.

Budget Secretary Rolando Toledo agreed with the senator’s estimate, adding that the government is already identifying alternative funding sources should the conflict persist.

“You’re right, Mr. Chair,” Toledo said. “We are actually issuing a circular to the different departments and agencies in terms of the efficiency measure which we are estimating around, right now, initially at 12 billion to 25 billion coming from that efficiency measure. Meaning to say, we are looking at non essential MOOE (maintenance and other operating expenses) like travels, training and RATA (representation and transportation allowances), other MOOE which are non-essential.”

He added that if the situation drags on, the government may have to suspend certain programs and reallocate funds for emergency response, similar to measures taken during the pandemic.

“If ever we extend this, pupunta tayo doon sa some sort of the funds or PAPs that we need to suspend para kailangan na natin pang-ayuda to respond for this crisis. Just like we did probably during the Bayanihan,” he continued.

Toledo noted that the government is currently utilizing available funds while relying on existing legal mechanisms.

“We have already the EO, the 110 that we can look at as initial ano po natin, power to consolidate those funds,” Toledo said. Executive Order No. 110 pertains to the declaration of a state of national energy emergency.

Gatchalian cautioned that a prolonged conflict could force difficult fiscal decisions. “If this conflict gets prolonged, humaba pa siya ng two months, mauubos natin itong 238, then we will have a big problem. We will now have to discontinue some projects, gagamitin na natin ibang savings.

"Gagalawin na natin ibang bagay. And we will now need yung finile ni Senator Risa na supplemental budget to move around funding,” Gatchalian stated.

Toledo said agencies may be asked to prepare contingency or catch-up plans if the conflict extends up to six months or even into next year.