The 2026 General Appropriations Act (GAA) allows the government to borrow funds for defense modernization, aiming to accelerate equipment upgrades while reducing pressure on the national budget, Senator Win Gatchalian said Wednesday.
“During the budget hearing of the DOTr under the Philippine Coast Guard (PCG), nakita ko na meron tayong overseas development assistance worth ₱4 billion or ₱5 billion. Humiram tayo ng pera para bumili ng barko for PCG which is good kasi mura yung loan, almost grant na rin,” Gatchalian, chairperson of the Senate Committee on Finance, said.
The new provision enables the government to use concessional overseas development assistance (ODA) loans for major acquisitions, instead of funding all big-ticket items directly through the GAA.
The same approach can now be extended to the Armed Forces of the Philippines (AFP), following discussions with Defense Secretary Gibo Teodoro.
“So, for the first time nakasulat ngayon sa GAA… na in-allow na natin ang gobyerno to borrow for defense equipment at marami ang gustong magpahiram sa atin,” he said, highlighting potential partnerships with countries like South Korea for aircraft, missile defense systems, and naval vessels.
Gatchalian emphasized that all borrowing would comply with the government’s medium-term fiscal framework and include safeguards.
“May limit siya because borrowing pa rin siya eh… in short, allowed na ang gobyerno to borrow for defense upgrade,” he said.