The Department of Finance (DOF) has been granted authority to arrange additional funding, including loans and grants, to support the Armed Forces of the Philippines (AFP) modernization program under the 2026 General Appropriations Act, House Minority Leader Marcelino “Nonoy” Libanan disclosed on Sunday.
“Congress introduced a new special provision in the 2026 budget law that allows the Secretary of Finance to enter into loan contracts or similar financing arrangements to help fund the military’s modernization projects,” Libanan said.
He cited the exact language of the provision, which authorizes the Finance Secretary, in consultation with the Department of National Defense, to negotiate and enter into foreign and domestic financing arrangements—including loans, grants, credit facilities, and blended financing mechanisms—subject to presidential approval and concurrence of the Monetary Board.
“This special provision gives the national government greater flexibility to finance critical AFP modernization projects in a timely and cost-effective manner,” Libanan added, noting that defense acquisitions often involve large, long-term, and highly technical contracts. Access to concessional loans, grants, or blended facilities, he said, can reduce costs and speed up delivery.
The AFP modernization program covers the acquisition of advanced military equipment, weapons systems, and defense-related technologies, including intelligence and surveillance capabilities.
Under the 2026 national budget, Congress allocated ₱40 billion in capital outlays for the program, up from ₱35 billion in 2025. An additional ₱50 billion was authorized under unprogrammed appropriations, contingent on excess revenue collections or loan approvals for foreign-assisted projects.
Libanan also urged Congress to prioritize the passage of the next AFP modernization law this year, stressing the importance of continuity as the current 15-year program, enacted in 2012, nears its expiration in 2027.
In 2025, the AFP modernization program marked milestones with the delivery of two newly built 3,200-ton guided-missile frigates—the BRP Miguel Malvar and BRP Diego Silang—joining the BRP Jose Rizal and BRP Antonio Luna delivered earlier. The Department of National Defense also received five additional S-70i Black Hawk helicopters and finalized a contract for 12 FA-50PH supersonic fighter jets scheduled for delivery by late 2026. (ZIA LUNA)
