Philippines: Key views on 2026 State of Nation address: Fiscal action remains measured; next development is 2027 budget details

Research evidence excerpt

Philippines: Key views on 2026 State of Nation address: Fiscal action remains measured; next development is 2027 budget details

ving over 30 million households

and industries across the country, with a strong pivot to renewable energy sources such as

solar, hydroelectric, and biomass. In response to the recent discovery of 222 billion cubic feet

of natural gas reserves in the Malampaya gas field, the President announced the awarding of

a record 14 petroleum service contracts that would extend the shelf life of the Philippines’

only gas field through 2034. Prospects for nuclear power production were also raised.

To better future-proof the Philippine economy, the SONA also touched on large-scale AI

readiness programs, the enforcement and negotiation of 23 free trade agreements, and the

acceleration of special economic zones, including the high-profile US-led Pax Silica

Initiative that cements the Philippines as a key strategic/economic partner of the US in digital

infrastructure, semiconductor supply chains, and critical minerals.

JPM View: Conservative fiscal posture lowers odds of debt-financed supplementary

budget

In an earlier note, we argued that the Philippine government has some fiscal room to enact

a PHP200 billion (0.7% of GDP) debt-financed supplementary budget in 2H26 to cushion the

macro impact of the Middle East conflict. Given renewed hostilities and the resurgence of oil

prices in recent weeks, we still hold on to this view, but with a lower conviction. Between the

Development Budget Coordination Committee's (DBCC) updated 2026-30 Fiscal Year

program in early-July and the President’s July 27 SONA speech, the guidance for a marked

increase in ad-hoc, deficit-widening fiscal packages this year is admittedly few and far

between.