Fighting corruption is a sound economic strategy

Earlier this month the World Bank said it had lowered its growth forecast for the Philippine economy. Initially, the projection was 5.4% in 2026 and 5.5% in 2027. Its downgraded forecasts are now 5.3% in 2026, and 5.4% in 2027. These fall below the government’s own targets of 5.5% to 6.5% this year, and 6% to 7% for 2026 through 2028.

Reasons for the downgrade include mounting domestic headwinds, including climate-related disasters. Governance risk is also a culprit, as shown by the massive flood control corruption scandal. News of the widespread plunder of government funds by public officials has indeed weighed down investor confidence and economic performance.

“Corruption is unacceptable,” said Zafer Mustafaoğlu, World Bank’s Division Director for the Philippines, Malaysia, and Brunei. “The Philippines can leverage its strong economic foundation to implement bolder reforms that can unlock faster, more inclusive growth.”

The empirical evidence showing corruption’s toll on the economy is not only from the World Bank. Philippine government data also tells a story. Specifically, on Dec. 1, Department of Economy, Planning, and Development (DEPDev) Secretary Arsenio M. Balisacan acknowledged that reaching even the lower end of the government’s 2025 growth target is “very unlikely.”

It had also downgraded its 2025 target from the original 6% to 8% to a lower range of 5.5% to 6.5%. The reason: GDP growth slowed sharply to 4% in the third quarter — the weakest in four and a half years — largely due to restrained government spending. Again, this followed the infrastructure corruption scandal involving billions of pesos in alleged “ghost” and substandard flood control projects.

We believe that the government knows what needs to be done to address these slowing growth prospects at a time when they should be accelerating. Corruption has been identified as the main culprit for our economic woes. Therefore, it is almost a no-brainer that improving our economic outlook requires newer, more decisive, and more sustainable ways to combat corruption and increase confidence in Philippine governance.

PRIORITY REFORM MEASURES
During a meeting of the Legislative-Executive Development Advisory Council (LEDAC) on Dec. 9, President Ferdinand Marcos, Jr. called for swift action on four priority reform measures, namely the Anti-Dynasty Law, the Independent People’s Commission Act (IPCA), the Party-list System Reform Act, and the CADENA Act.

The proposed Anti-Dynasty Law seeks to limit the concentration of political power by restricting members of the same family from holding or succeeding in elective positions. The Anti-Dynasty bills in both chambers seek to bar spouses and relatives within the fourth degree of national or local officials from running in the same legislative district, province, or city.

The Independent People’s Commission Act aims to establish an autonomous body that will strengthen citizen oversight and accountability in government. Senate President Tito Sotto filed the IPCA in response to the multibillion-peso flood control scandal. Senate Bill No. 1512 proposes an autonomous investigative body with broad powers to address systematic corruption in public works projects, recover stolen funds, and prevent abuses that worsen disaster impacts.

The Party-list System Reform Act seeks to restore the system’s original intent by preventing its capture by political dynasties and vested interests. The bill requires the Commission on Elections to hold public hearings to verify that party-list nominees genuinely represent their claimed constituencies. It also bars nominees related to incumbents up to the third degree and those with links to government contractors or firms handling state-funded projects.

Meanwhile, the Citizens Access and Disclosure of Expenditures for National Accountability (CADENA) Act or Blockchain the Budget Act, requires agencies to upload and maintain budget-related records — including contracts, project costs, bills of materials, and procurement documents — on a digital platform accessible to the public. The measure aims to improve transparency by granting the public greater access to government spending and procurement information.

FIGHTING CORRUPTION
Running after the corrupt and jailing them are important steps in the fight against corruption. They send a clear message that the thievery of public funds that should go to the benefit of the people is unacceptable, and that it carries serious consequences.

But there are other equally important aspects to fighting corruption and instituting governance, on a wider scale.

For many decades, corruption has thrived in the Philippines because of weak systems, enabling some people to work around loopholes and exploit the gray areas of the law. The abovementioned pieces of legislation are bold decisive steps in introducing systemic reform. Enacting these reforms is a crucial step toward institutionalizing inclusive governance, where government processes are transparent, accountable, and accessible to all citizens.

Ultimately, when investors see that the government is taking steps to ensure transparency and accountability across the board, and when corruption is no longer the norm, more investments will pour in, translating into more jobs and greater opportunity for income generation.

Ordinary Filipinos are the most affected by slower economic growth, especially amid persistent inflation and high prices. When investor confidence weakens, job opportunities lessen and the cost-of-living crisis worsens. Tackling corruption is essential to restoring growth and delivering real benefits to the Filipino people. In turn, there will be greater trust in both the government system and its leaders.

By curbing corruption, promoting political equality, and ensuring citizen oversight, these measures can create a transformed and revitalized ecosystem in which every Filipino benefits from economic growth and efficient management of public resources, reinforcing trust in government and strengthening the country’s long-term development.

Victor Andres “Dindo” C. Manhit is the president of the Stratbase ADR Institute.