The Vanishing Shelter Budget: Housing Austerity, Debt Servicing, and Structural Inequality in Marcos Jr’s 2027 National Expenditure Program

Framed around the theme “People-Centered Growth for an Inclusive and Resilient Future,” the proposed P7.2 trillion national budget for 2027 underscores the Philippine government’s ongoing retreat from direct public mass housing provision. The Department of Budget and Management (DBM) has set aside a combined P6.73 billion for the broader housing and community development sub-sector. This allocation encompasses the Department of Human Settlements and Urban Development (DHSUD), its key shelter agencies (KSAs), as well as LGU-coordinated municipal infrastructure, civil works, and water utilities. However, the institutional funding allocated directly to the shelter agencies (DHSUD and KSAs) stands at just P5.498 billion—a steep drop from their joint proposal of P60 billion.¹

By comparison, the same National Expenditure Program (NEP) earmarks P1.114 trillion solely for debt-service interest payments, with overall debt obligations climbing to P1.143 trillion. Consequently, the state is slated to spend roughly 203 times more on interest payments to creditors than on funding shelter for its citizens.

Decreasing Public Spending on Housing

In preparing the 2027 budget, the Department of Human Settlements and Urban Development (DHSUD) alongside its Key Shelter Agencies (KSAs) submitted a joint budget proposal of P60 billion. This figure was intended to fulfill the government’s housing objectives, maintain progress on the 4PH program, and ensure sufficient resources for emergency shelter aid. As the main entity responsible for socialized housing production, the National Housing Authority (NHA) accounted for the majority of this request, seeking P44.732 billion. To meaningfully tackle the national housing shortage, the agency had previously requested as much as P197 billion or more in past budget cycles. Ultimately, however, the Department of Budget and Management (DBM) slashed the requested P60 billion by over 90% in the final 2027 National Expenditure Program (NEP).²

Table 1. 2027 housing agencies proposal versus DMB recommendations

Agency	Proposed Budget for 2027 (Requested)	DBM Recommended Budget in 2027 NEP	Percentage of Request Granted
National Housing Authority (NHA)	P44.732 billion	P2.274 billion	~5.08%
DHSUD (Office of the Secretary)	P4.962 billion	P2.492 billion	~50.22%
Human Settlements Adjudication Commission (HSAC)	P890 million	P566 million	~63.60%
Social Housing Finance Corp. (SHFC)	P4.666 million	P166 million	~3.56%
National Home Mortgage Finance Corp. (NHMFC)	P4.750 million	P450,000	~0.01%
Total Consolidated Housing Budget	~P60.000 million	~P5.498 billion	~9.16%

The fiscal trajectory for the Housing and Community Development sub-sector under Ferdinand Marcos Jr’s 2027 NEP shows a sharp reduction, dropping to P6.73 billion from P10.68 billion in 2026. This reflects a P3.95 billion, or 37%, contraction within an overall national budget that expanded by 5.99%. As a result, housing’s slice of the Total Expenditure Program shrinks from 0.16% down to 0.09%.

This marks an unprecedented decline, pushing the housing sector’s funding share beneath one-tenth of 1% of the national budget. Data from the Congressional Policy and Budget Research Department (CPBRD), a House of Representatives think tank, indicates that between 2016 and 2020, the sector averaged a 0.18% budget share.³ Rather than maintaining that historic stagnation, the 2027 figures signify an active erosion of public spending on shelter, cutting it down to nearly half of its previous baseline.

The strain becomes even more pronounced when examining the individual agency line items within the NEP:

Table 2. 2027 DHSUD and KSAs agency-level appropriations

Agency	2027 NEP
DHSUD – Office of the Secretary (OSEC)	P2.50 billion
Human Settlements Adjudication Commission	P566.04 million
National Housing Authority (NHA)	P2.274 billion
Social Housing Finance Corporation (SHFC)	P166.08 million
National Home Mortgage Finance Corporation (NHMF)	P0.45 million
Home Guaranty Corporation (HGC)	P0.00
Housing agencies, total	P5.489 billion (0.076% of a P7.2-trillion national budget)

DHSUD, at only P3.06 billion, is the second-smallest department in the NEP, ahead only of the Commission on Human Rights and the Office of the Vice President.

The austerity on public housing must also be read longitudinally. For 2026, the housing agencies proposed P225.8 billion and received only P5.562 billion in the 2026 NEP, or 2.5% of their request.⁴ The pattern, shown in Table 3, spans the sector’s entire institutional life.

Table 3. Housing sector institutional budget proposals versus NEP allocations, selected fiscal years.

Fiscal year	Sector proposal	NEP/DBM allocation	Share of proposal funded
2021	P76.19 billion	P3.900 billion	5.1%
2023	P95.98 billion	P3.900 billion	4.1%
2026	P225.80 billion	P5.562 billion	2.5%
2027	P60.00 billion	P5.498 billion	9.2%

Directly contrasting this fiscal austerity is an overwhelming demand for shelter. To adjust for past discrepancies, the DHSUD revised its projected housing requirement for 2023 to 2028 down to 3.7 million units. This recalibration replaced the former 6.5-million unit deficit, a change Senator Escudero publicly denounced as a statistical tactic designed to artificially improve official metrics.⁵

Meanwhile, UN-Habitat continues to benchmark the deficit at 6.5 million units, identifies 3.7 million families living in informal settlements, and cautions that national demand could soar to 22 million units by 2040 without policy intervention.⁶ Against a national goal that was already scaled back from 6 million to 1.13 million units, public output registered only 575,693 units produced or financed between July 2022 and June 2026.⁷

Even under the generous assumptions of zero administrative overhead and a subsidy cost capped at P1 million per unit, a total allocation of P5.498 billion yields roughly 5,000 units annually. Juxtaposing this funding against any metric of actual demand—including the DHSUD’s own reduced target of 3.7 million units—reveals a budget that effectively abandons housing as a genuine public enterprise, choosing instead to sustain a housing department without a housing program.

Austerity and the Privatization of Social Reproduction

Housing serves a dual role within capitalist social structures: it functions simultaneously as an essential use value for sustaining daily and generational labor power, and as an exchange value powering financialized accumulation. Modern neoliberal governance resolves this inherent contradiction by dismantling direct public housing initiatives and converting shelter into a debt-driven commodity. The 2027 National Expenditure Program (NEP) illustrates this shift with remarkable clarity.

To bridge the gap between Marcos Jr.’s ambitious political rhetoric pledging to end the housing shortage and the meager P5.489 billion actually allocated to shelter agencies, the administration has heavily championed and structurally relied upon the flagship 4PH program.

The operational model of 4PH hinges on interest-rate subsidies, credit guarantee facilities, and Pag-IBIG Fund mortgage financing capped at 3% for socialized housing loans, paired with an expanded loan ceiling of P10 million. Under this framework, workers’ pooled provident savings and private developer funds are directed toward building housing units. However, as DHSUD officials themselves acknowledge, price ceilings for these projects (P850,000 for horizontal socialized housing, P1.8 million for vertical developments, and P2.5 million for “economic” housing) have grown completely detached from real household earnings.⁸ Consequently, the state’s involvement is reduced to de-risking private real estate finance. This allows its budgetary obligations to contract dramatically, since covering interest differentials requires a fraction of the capital needed to construct public housing, while the fiscal liabilities of credit guarantees remain deferred, contingent, and concealed from annual budget statements.

This structural reliance on debt represents the financialization of housing operating as an instrument of fiscal austerity. The economic burden of social reproduction is systematically shifted away from the state budget across three primary areas: First on household budgets. Families are forced to absorb long-term mortgage commitments (usually 30 years) aligned with developer profit margins, even as official government projections anticipate inflation persisting at 4.0 to 5.0% for 2027.⁹ Second, on workers’ savings. Collective provident funds in Pag-IBIG are repurposed, turning a social welfare institution into an instrument for capitalizing private real estate markets. And finally, on unpaid community labor. Informal settler families are left to self-finance, self-build, and navigate risks on the margins of urban centers that shut them out of formal land ownership.

Ultimately, the P5.498 billion institutional housing budget codifies a policy strategy where shelter for marginalized communities is governed by market mechanisms, private debt, and informal self-exploitation.

This reallocation of responsibility carries profound gendered and generational consequences. Social reproduction theory emphasizes that adequate housing provides the essential infrastructure for life-sustaining labor, including caregiving, meal preparation, rest, education, and recuperation. By defunding socialized housing, the state expands the labor burdens of those who manage households under hazardous, congested, and insecure living conditions—a responsibility borne disproportionately by women. Furthermore, state-sanctioned demolitions and off-city relocations continue under the current government, fragmenting community support systems, disrupting livelihoods, and extending care obligations. Budgetary austerity in housing therefore translates directly into austerity inflicted on life-making labor, shifting human costs onto uncompensated labor time, diminished health, and limited future prospects rather than accounting for them in public expenditures.

Debt Servicing as the National Budget’s Priority Allocation

The 2027 NEP directs P1.114 trillion toward interest payments—representing 15.48% of the proposed budget and an 17.29% surge from the 2026 NEP. Concurrently, principal amortization will grow by 51.5% to reach P1.590 trillion, pushing overall debt servicing to P2.704 trillion. To satisfy a P1.695 trillion deficit alongside maturing obligations, gross government borrowing is set at P3.304 trillion, driving national debt to an unprecedented P21.479 trillion by late 2027, with P7.197 trillion owed to foreign entities.¹⁰ Marcos Jr.’s Budget Message earmarks P1.143 trillion for the “Debt Burden” category, defending these settlements as mandatory to preserve fiscal credibility, bolster investor confidence, and maintain the credit access necessary for long-term growth objectives.¹¹

This structural debt apparatus impacts the national shelter strategy through three key mechanisms: First, debt servicing is legally insulated from congressional review through automatic appropriation provisions originating in Marcos Sr.’s Presidential Decree 1177 and reaffirmed by the Administrative Code of 1987 (Executive Order No. 292). Within the 2027 NEP, non-discretionary obligations (comprising Automatic Allocations and net Personnel Services) are dominated by debt servicing, which consumes 64% of the total budget, leaving a shrinking discretionary residual within which all social sectors compete. Housing, lacking the constituency power of education’s constitutional mandate or the electoral salience of cash transfers, absorbs the residual of the residual.

Second, fiscal authorities attribute the escalating debt burden to a nearly 20% depreciation of the Philippine peso since the pandemic-era borrowing spree, alongside the refinancing of expiring concessional loans at elevated interest rates. Consequently, external interest obligations are projected to expand by 18.6% to P301.9 billion in 2027.¹² State budget records detail a creditor base including the Asian Development Bank, the World Bank’s International Bank for Reconstruction and Development, the Japan International Cooperation Agency, and various bilateral institutions. The servicing of these loans supports the very infrastructure and budgetary initiatives through which international policy mandates shape domestic fiscal priorities. In this framework, debt acts as a mechanism of structural compliance: the imperative to secure continuous market access subordinates national spending choices to the criteria of credit rating agencies and international financial bodies, whose framework views state-led housing construction as a market distortion, promoting instead the market-enabling, finance-driven model adopted since the 1980s structural adjustments programs imposed by the International Monetary Fund and the World Bank. The P5.498 billion housing allocation and the P2.704 trillion debt servicing expenses remain interconnected elements of a single fiscal structure.

Finally, as detailed in Table 4, just two days of national interest payments exceed the entire annual budget allocated to housing. Furthermore, the P540.6 billion year-on-year increase in principal repayments alone could fund the full P60 billion funding request of housing agencies nine times over. These figures demonstrate that the state possesses the financial capacity to address the housing deficit, yet systematically assigns those resources to debt service through policy and legal mandates.

Table 4. The 2027 housing allocation against major budget claims

Budget item	2027 allocation	Multiple of housing sector budget
Total debt service (interest + amortization)	P 2.704 trillion	492×
Principal amortization	P 1.590 trillion	289×
Build Better More infrastructure program	P 1.467 trillion	267×
Interest payments	P 1.114 trillion	203×
Department of Public Works and Highways	P 644 billion	117×
Armed Forces of the Philippines operations	P 316.7 billion	58×
Department of Transportation	P 301 billion	55×
Pantawid Pamilyang Pilipino Program (4Ps)	P 99.1 billion	18×
AFP modernization program	P 50 billion	9×
Housing sector (DHSUD + KSAs)	P 5.498 billion	1×

Structural Inequality and the Political Economy of National Budget Allocation

National budgets serve as concrete manifestations of prevailing class dynamics and the 2027 NEP clearly demonstrates which sectors of capital dictate state investments.

This structural alignment is evident in the allocations itemized in Table 4: P1.467 trillion earmarked for the Build Better More program, P644 billion for public works, a 118.4 percent surge in transport funding propelled by foreign-backed mega-rail developments, and P316.7 billion for military expenditure—with the armed forces’ modernization fund alone exceeding the entire shelter budget nine times over. This spending trajectory illustrates how state interventions manage capital overaccumulation crises by funneling surplus into secondary built-environment projects that raise land values, optimize export-oriented logistics, and unlock opportunities for property development, all while withholding adequate resources for the social reproduction of the populations uprooted by this very expansion.

Table 5. Displacement is more heavily funded than housing

Displacement-financing line	2027 NEP allocation
DPWH – Payments of Right-of-Way	P15.724 billion
DOTr – Payment of Right-of-Way and VAT Obligations	P2.790 billion
NIA – Right-of-Way, completion works, unpaid claims	P200 million
Total	P18.714 billion

The fiscal framework actively worsens the housing deficit it purports to solve. As highlighted in Marcos Jr.’s Budget Message, the 201 Infrastructure Flagship Projects (totaling P10.277 trillion) are poised to reshape urban land dynamics across project corridors. Land value appreciation along railway lines and reclamation areas primarily enriches the developer-landlord bloc (conglomerates spanning banking, real estate, and construction), whose interests are prioritized through 557 public-private partnership initiatives.¹³ By driving up real estate prices, this pattern of infrastructure investment renders even basic “socialized” housing unaffordable, simultaneously establishing new demolition zones that displace and evict urban poor communities.

This class bias is equally built into the architecture of the housing strategy. Eligibility criteria, defined by rigid price caps and mortgage requirements, presume a beneficiary profile of formally employed, creditworthy households, excluding the vast majority of workers in informal and precarious employment. Jeepney drivers displaced by transport “modernization” schemes, market vendors, domestic workers, and construction laborers on the infrastructure flagship projects typically fall short of the underwriting metrics mandated by this debt-centric framework, which has supplanted direct state provision. Consequently, national housing policy solidifies divisions within the working class: it offers subsidized homeownership to a small formal sector, while leaving the informal majority exposed to land tenure instability and state-backed demolition and eviction actions. Regional spending accentuates these disparities, as infrastructure funds cluster heavily in the National Capital Region and surrounding industrial zones—the very areas where land concentration is highest and where 500,000 informal settler families residing in high-risk Metro Manila locations remain without funded resettlement options.¹⁴

Furthermore, the budget reinforces existing agrarian structures. Unresolved agrarian inequality forms the root driver of urban informality in the Philippines, as stalled genuine land reform and rural economic distress push rural populations toward urban centers. By allocating P276.6 billion to agriculture mostly through input subsidies and tariff-backed competitiveness measures (without dismantling rural landlord control) the budget ensures the ongoing generation of displaced urban populations. The urban housing crisis remains directly tied to the unaddressed agrarian problem, yet current Marcos Jr.’s fiscal priorities leave both problems unresolved.

Conclusion

The 2027 NEP asks to be read as a moral document; its own concluding rhetoric describes the budget as “our moral and economic compass.” Taken at that invitation, the compass points unambiguously. A state that programs P2.704 trillion for creditors, P1.467 trillion for capital-serving infrastructure, and P5.498 billion for the housing of a nation with millions of unhoused and precariously housed families has ordered its obligations: accumulation first, creditors first, social reproduction last.

The underfunding of housing is systemic in the strict sense. It follows from automatic appropriations that constitutionalize creditor seniority, from a financialized shelter policy that converts a right into a debt relation, and from a class structure in which the developer-landlord-financier bloc writes its priorities into the expenditure program while the urban poor appear only as objects of clearance and conditional transfer.

The corollary for progressive fiscal politics is equally direct. Meaningful housing budgets require confronting the debt architecture itself. They require a housing program organized around direct public production, on-site and in-city upgrading, and community-led development financed as public investment. They require, ultimately, the redistribution of land in the city and countryside alike. The 2027 budget demonstrates that within the present configuration of the Philippine state, the housing question will be answered by the market, by household debt, and by the demolition crew. Changing the answer requires changing the system.