The Financial Executives Institute of the Philippines (FINEX) has called on government officials to pursue well-targeted public spending to stimulate the economy, warning that the misuse of public funds could undermine long-term economic recovery.

In a statement issued on Wednesday, FINEX emphasized the critical role that government expenditure plays in supporting economic activity, creating jobs, and encouraging investment.

"FINEX recognizes the important role of government spending in supporting economic activity, creating jobs, and encouraging investment. At a time of slowing growth, the country needs well-targeted public expenditure to help stimulate the economy," the group said.

"However, faster spending cannot come at the expense of good governance," it added.

FINEX renewed its call for transparency and accountability in the use of public funds, highlighting the compounding challenges facing the country.

"Slow growth limits opportunities for Filipino families, flood damage imposes real economic and human costs on communities, and the misuse of public funds weakens the country's ability to respond, recover, and invest in long term resilience," FINEX said.

The group stressed that the need for effective public spending has become increasingly urgent given the country's weak economic performance. The Philippine economy grew 2.3% in the three months to June, falling short of both the 5.4% year-earlier expansion and the 2.8% growth recorded in the first quarter. The figure also trailed the government's 6.0–7.0% full-year growth target for 2024, a goal that has become increasingly difficult to reach after the first-half slowdown.

FINEX also pointed to the government's increasingly constrained fiscal position, underscoring the need for prudent spending. The National Government's debt-to-GDP ratio climbed to 65.2% at the end of the first quarter, marking its highest level in more than two decades. The ratio stood at approximately 39.6% before the pandemic, with the sharp increase reflecting pandemic-era borrowing to fund the government's crisis response.

FINEX noted that this "underscores the importance of ensuring that borrowed funds are deployed efficiently and productively."

"With economic growth slowing and public debt continuing to rise, the Philippines can ill afford inefficient or ineffective public spending," the group said.

"At the same time, government should continue to invest decisively in high-impact infrastructure and other priority programs under strengthened governance and accountability mechanisms," FINEX added.

— Beatriz Marie D. Cruz