Continuity, Not Just Planning: Why the Philippines Must Mainstream Multi-Year Financing
By Karl Garcia
The Philippines is not short of plans. It is short of continuity. Across administrations, the country produces development roadmaps, modernization programs, infrastructure pipelines, and reform frameworks that diagnose problems with clarity and ambition. Yet execution frequently lags behind intent. Projects stall, timelines stretch, costs escalate, and priorities shift with political cycles. The gap between vision and outcome is not primarily intellectual or technical—it is structural. At the center of this structural constraint lies a persistent tension between multi-year development needs and a budget system dominated by annual appropriations.
Modern state-building is inherently multi-year. Rail networks, flood control systems, ports, energy infrastructure, digital connectivity, defense modernization, and agricultural transformation cannot be meaningfully designed, procured, and delivered within twelve months. These investments unfold in phases, require long-term contracts, depend on stable funding flows, and demand uninterrupted implementation. But when such programs are squeezed into an annual budget framework, fragmentation becomes the default condition. Agencies must repeatedly seek reauthorization. Funding becomes vulnerable to political negotiation. Implementation is exposed to delays, reallocation, and shifting legislative priorities. Development becomes episodic rather than cumulative.
Annual budgeting serves legitimate functions. It reinforces legislative oversight, allows fiscal recalibration, and provides flexibility in response to economic shocks. However, when applied indiscriminately to all categories of expenditure—including long-horizon capital investments—it distorts incentives and weakens execution. Instead of optimizing for completion and long-term value, the system often optimizes for yearly survival: obligate funds before deadlines, renegotiate timelines, adjust scopes, and manage uncertainty rather than eliminate it.
Two Philippine policy arenas illustrate this continuity problem with particular clarity: defense modernization and agriculture-fisheries modernization.
Defense Modernization: Long Horizons, Interrupted Flows
The Armed Forces of the Philippines (AFP) modernization program was conceived as a phased, multi-decade effort to upgrade capabilities, professionalize forces, and align defense posture with evolving security realities. By design, modernization involves long procurement cycles, complex contracts, and sequenced acquisitions. Yet progress has repeatedly encountered friction from funding instability, delayed releases, and budget constraints. Even when modernization is legally authorized, the translation of program intent into predictable multi-year financing has proven uneven.
The consequences are operational as well as financial. Procurement timelines stretch when funding is uncertain. Suppliers price in risk. Capability upgrades occur slower than strategic needs demand. Multi-year projects compete annually with other priorities, creating bottlenecks that undermine planning certainty. The result is not merely slower modernization—it is a system in which strategic defense capability is tethered to short-term fiscal rhythms.
Agriculture and Fisheries: Reform Without Sustained Investment
The Agriculture and Fisheries Modernization Act (AFMA) envisioned structural transformation—mechanization, logistics improvement, research and extension, post-harvest systems, value chain upgrading. Yet decades later, modernization remains incomplete. While many factors contribute—governance, market structure, climate vulnerability—financing continuity is a critical variable. Agricultural modernization requires sustained capital investment, not sporadic yearly allocations vulnerable to budget compression or shifting priorities.
Farm-to-market roads, cold chains, irrigation systems, digital extension platforms, fisheries infrastructure—these demand multi-year commitment. Annual funding uncertainty fragments implementation, encourages piecemeal delivery, and weakens the long-term planning environment essential for structural transformation.
Procurement Law vs. Incentive Structure
Public discourse often attributes project delays and failures to procurement law or corruption alone. While governance risks are real, procurement frameworks such as RA 9184 are not inherently the core problem. The law provides robust rules governing bidding, evaluation, and contract award. Yet projects rarely fail at contract signing. They fail during implementation—where delays, change orders, weak monitoring, and misaligned incentives accumulate.
Annual budgeting exacerbates these weaknesses. Funding uncertainty can trigger rushed obligations near fiscal deadlines, encourage repeated renegotiations, and normalize “temporary” delays that become systemic. Contractors adjust behavior to risk structures. Agencies manage volatility instead of enforcing performance. A legally sound procurement system thus operates within a financially unstable environment, weakening outcomes.
Urban Development: The Visible Face of Discontinuity
The continuity problem is not confined to national programs. Urban development mirrors the same pattern. Public spaces, waterfront redevelopments, pedestrianization projects, traffic schemes, and environmental initiatives often fluctuate with political transitions. Projects launched with enthusiasm are redesigned, paused, or reversed by successors. The built environment becomes an archive of discontinuity. Investment loses predictability. Long-term urban transformation yields to short-term symbolism.
International Practice: Hybrid Budgeting as the Norm
Globally, few countries rely exclusively on annual budgeting for long-term investments. Instead, many employ hybrid systems:
- Medium-Term Expenditure Frameworks (MTEFs) to anchor multi-year fiscal planning
- Forward estimates to provide funding visibility beyond one year
- Multi-year appropriations for infrastructure and defense
- Expenditure ceilings to stabilize priorities across political cycles
Annual oversight remains intact, but it is grounded in credible medium-term commitments. Continuity is institutionalized, not improvised.
Why MYOA Matters
Multi-Year Obligational Authority (MYOA) directly addresses the structural mismatch between development timelines and budget cycles. MYOA allows agencies to commit funds for projects spanning several years, providing:
- Funding predictability for long-term contracts
- Stability in procurement and implementation
- Reduced exposure to annual political bargaining
- Improved planning certainty
- Better value for money through lower risk premiums
The Philippines already uses MYOA selectively. The policy question is not whether MYOA is viable—it is why it remains limited.
Safeguards and Design Principles
Mainstreaming MYOA must be accompanied by institutional discipline:
- Rigorous project evaluation before MYOA approval
- Transparent multi-year reporting
- Performance benchmarks and milestones
- Clear rules on variation orders and delays
- Debt and deficit management alignment
- Strong audit and monitoring mechanisms
Continuity must not weaken accountability; it must strengthen it.
From Control to Commitment
At its core, the debate over MYOA is philosophical as much as procedural. Annual budgeting maximizes short-term control. Multi-year financing prioritizes long-term commitment. Development, by nature, requires the latter. Infrastructure, modernization, and structural reform cannot thrive in a system optimized for yearly renegotiation.
Conclusion: Development Is a Continuum
The Philippines has demonstrated planning capacity. The challenge is to construct fiscal and institutional systems that allow plans to survive implementation realities and political transitions. Defense modernization, agricultural transformation, and urban development all reveal the costs of discontinuity. Multi-year challenges demand multi-year financing logic.
Development is cumulative. State capacity is built through sustained execution. National transformation cannot be credibly financed one budget year at a time.
Mainstreaming MYOA is not a technical adjustment—it is a structural correction. It is the recognition that continuity is not a luxury of governance. It is its foundation.
The Society of Honor by Joe America 