Funding the largest modernization undertaking in the recent history of the Armed Forces of the Philippines also comes with the budgeting element in mind, where based on the recent enactments for budget, is not enough to fund multiple big-ticket projects like the long-awaited multirole fighter jets that the Philippine Air Force has long sought to aspire.
This entails the need for seeking multiple financial arrangements to make it possible, but with current legislative limitations, this avenue is insufficient in accomplishing the materialization of such large acquisition projects that each service branch of the Philippine Armed Forces comes to mind. That exact limitation is the one that the current bill in the House of Representatives tries to achieve.
AT A GLANCE
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| The bill, amending the old Presidential Decree, will help the Armed Forces of the Philippines finance its large, key big-ticket projects it has in the pipeline, especially the ones beyond the annual budget. |
‘Defense is never cheap’. This is a quote that always comes with the plans that the Department of National Defense and the Armed Forces of the Philippines have for buying large acquisition projects that usually bear a corresponding expensive price tag.
And so far, several projects that were once unattainable became the norm in the country’s defense procurement landscape, with the purchases of large naval frigates and FA-50 lead-in fighter trainer jets being the product of such deals amounting to billions of pesos.
Currently, the Armed Forces of the Philippines embarks into its largest acquisition project yet, one that involves the purchase of the package that forms part of the multi-billion peso program of the Philippine Air Force, which is the one regarding its multi-role fighter jets.
This acquisition project comes with a call for a comprehensive package from none other than the Secretary of National Defense himself, whereby various financing schemes and approaches outside the annually allotted budget are under consideration.
As previously discussed on the topic published on this website relative to the multirole fighter jet package proposal coming from the Department of National Defense, one primary obstacle that kept them and the Philippine Air Force into availing the soft loans and other equally arranged financial schemes is the limit imposed by the Presidential Decree 415, better known as the ‘Authorizing the Secretary of National Defense to Enter Into Defense Contracts to Implements Under the Self-Reliance Defense Programs and For Other Purposes’.
The said provision of the law limits the amount of the financial scheme needed for a modernization project to materialize, whereby it is currently limited to around US$ 300,000,000.00 to fund a modernization project.
For context, the budget needed for at least twenty (20) F-16 Viper Block 70/72 fighter jets as presented by the Defense Security Cooperation Agency or DSCA is at around US$5.58 Billion, in which it is well beyond the limits imposed by the said presidential decree.
With the current limitations restricting the Armed Forces of the Philippines from undertaking large monetary amounts of financial packages to fund an acquisition project well beyond the figures presented through the annually enacted General Appropriations Act, the calls for the revisions over the presidential decree resonates well to the current urgency of the country’s defense posture in the region where a member of the House of Representatives provided a draft bill that is meant for this very purpose.
THE HOUSE BILL
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| Letterhead of the said House Bill. |
The House Bill No. 8059 contains a four-page document filled with provisions and guidelines that will serve as a primary basis for soft loan arrangements that the national government will undertake related big-ticket defense acquisition projects that are beyond the capacity of the annually enacted general appropriations act. It is also here that introductory amendments are within this presentation, giving clear emphasis to its intent to revise the provisions stipulated in the old presidential decree.
In its explanatory note that covered at least two (2) pages of the entire document, the bill highlighted the inadequacies that the annually enacted General Appropriations Act in funding the Revised AFP Modernization Program, in which the overall increase in the defense budget does not suffice the requirements needed by the Department of National Budget for its pipelined acquisition projects. The primary bill’s premise is in authorizing the government to undertake soft loans with higher allowable amounts.
The bill, while highlighting the said inadequacies, also acknowledges the efforts provided by the previous legislation related to the improvement of the overall war-fighting capabilities of the Armed Forces of the Philippines, especially the current Revised AFP Modernization Program or the Republic Act 10349 that mandates the government to provide specific allotment for its implementation, and its predecessor the Republic Act 7898, which was the original 1990s-era AFP Modernization Program.
Ultimately, it aims to fix the limitations imposed by the enacted Presidential Decree No. 415 regarding the maximum allowable amount in taking soft loans and similarly arranged financial packages, whereby that said ceiling will get the needed increase that actually reflects the realistic requirements that the Armed Forces of the Philippines currently have, compared to the presented figures that reflect the monetary value of when the old presidential decree went into effect way back 1970s.
The next sub topic will cover the specific figures provided in the proposed bill that will revise the presidential decree, providing an added perspective on how the new maximum monetary value converts into an actual acquisition project that the Armed Forces of the Philippines actively pushes, especially when compared against its most expensive modernization projects that it has in pipeline. The projects provided will use the initially approved budget for the contract as a measurement for this study.
IN THE FIGURES REPRESENTED
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| The provision in the House Bill increased the cap for foreign-based military loans to at least US$1 billion. |
One primary contention as to the purpose of the push for the proposed House Bill No. 8059 on the revisions over the Presidential Decree No. 415 is on the maximum amount allowable for the national government to secure a soft loan or similarly crafted financing scheme from overseas financial institutions and governments that propose this scheme, enabling the Philippine government to fund more military-based projects while retaining the safeguards that the said legislation wants to achieve in limiting this practice.
Under the said presidential decree, the maximum allowable amount for the government to undertake such financing schemes originating from overseas financial institutions and government-to-government offers comes with a smaller amount, which specifically emphasizes that it will only allow soft loans and other financing arrangements to around US$300 million, which is a small amount at the time this article published in 2026, given the foreign exchange movements and inflation being the primary factors.
For context, the exchange rate between the US dollar and the Philippine peso in 1974 - the year when the presidential decree has passed, was at Php 6.73 to Php 7.03 throughout the year, which were almost equally valuable compared to the current exchange rate of US$1.00 = Php 60.83 as of August 8, 2026. Another factor at play is inflation, whereby the amount of US$300 million in 1974 is now equated to US$2,032,162,271.81 or US$2.032 billion, which made the old presidential decree obsolete to deal with current needs.
With the maximum cap amount allowed for soft loans still stuck at US$300 million, while its actual amount in 2026 is now at US$2.032 billion that includes inflation, makes the House Bill No. 8059 still insufficient for its US$1 billion (Php 60.83 billion) maximum cap amount, yet the said value is still decent enough for several modernization projects that the Armed Forces of the Philippines pushes, although having another billion to include in the house bill that realistically reflects inflation will be of great help.
The values presented and the context that came relative to the presented calculations on both of the currency exchanges and inflation that incur through at least five decades plays an important part in discussing this topic, as the next part will present the actual figures for several of the key big-ticket projects that the Department of National Defense aims to push but still lingering in a limbo, as limited available budget restricts some of these projects from pushing through the grueling materialization phase.
PROJECTS THAT MIGHT RELY ON THE BILL’S ENACTMENT INTO LAW
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| One primary project that might benefit in this amendment of PD 415 is the Multirole Fighter Jet Program of the Philippine Air Force. Image by ëŒ€í•œë¯¼êµ êµë°©ë¶€ - Ministry of National Defense of the Republic of Korea |
In the recent developments surrounding the Revised AFP Modernization Program and its implementation, there are a multitude of big ticket projects that any from the three service branches of the Armed Forces of the Philippines that might need the enactment of the amendments pushed for the Presidential Decree 415, just for its implementation to push through. The said enactment is important for the government to undertake soft loans and financing under the expanded legality it aims to achieve.
One primary modernization project that might benefit from this enactment is the Philippine Air Force’s multi-role fighter jet acquisition program, although the amount sought in the proposed package pushed by the Department of National Defense might have likely exceeded when compared to the maximum allowable amount for the government to avail of soft loans and similar-type financing. For context, the DND unveiled information that it requires at least Php 400 billion for three (3) MRF squadrons.
In the amount presented, basing the amendments of the Presidential Decree 415 to the actual inflated price of US$300 million in 1974 to at least US$2 billion in 2026 might have helped the Philippine Air Force secure at least a squadron or two (2) multirole fighter jets, plus the packages that might have come with the offer depending to the aerospace company that made an offer and the perks that might come with it. For example, the DSCA offer for F-16 Vipers intended for the Philippines has the price tag of US$5.58 billion, which is likely insufficient for the bill amendment to cover.
Another modernization that will probably benefit from this enactment is the Submarine Acquisition Project of the Philippine Navy, as this also went to the sidelines as the naval service branch currently focuses on adding more surface vessels instead like with its current development of securing the second (2nd) and potentially the third (3rd) batches of the Miguel Malvar-class frigate. The proposed price for the project amounts to Php 70 billion or US$1.3 billion, depending on the source.
Given the presented figures on each aforementioned modernization projects, getting a US$1 billion maximum allowable amount for the government to avail for its capacity-building of the Armed Forces of the Philippines is insufficient, whereby securing at least US$1 billion more on top of the said allowable amount might suffice for the defense establishment to get a preferable offer for the said presented amount. Perhaps the initial maximum amount on the house bill requires additional consideration.
IN THE FOREGOING
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| The status of the bill is still pending on the committee level within the House of Representatives. |
Currently, the said house bill does not go beyond committee level at the time of publishing this article, as it is still pending in the Committee of National Defense and Security as of March 2026 (see image above).
This basically means that its fruition is still far from realization, as it is where many inputs in modifying the bill’s provisions such as increasing the maximum allowable amount to avail a soft loan to at least US$2 billion, with the inflation rate correlated to the original US$300 million as the primary basis.
The lack of movement in this legislation, along with the absence of any mention surrounding national defense or in having this house bill counted as a priority during the President’s State of the Nation Address (SONA) on July 27, 2026, makes this legislative push for amending the current Presidential Decree 415 less likely, as the national government’s national priority emphasizes more on providing social services and infrastructure, just as usually expected every fiscal year.
This leaves the current push for the acquisition of multirole fighter jets for the Philippine Air Force and submarines for the Philippine Navy in a precarious position, whereby there is a risk that the plans and programming for both projects might collapse, with reasons pointing to both the lack of available budgetary allotments as specified in the annually enacted General Appropriations Act, and the lack of movement in this legislation that might enable the executive branch to enter defense deals with soft loans in mind.
With the limited budgetary allotment intended for the Revised AFP Modernization Program, as in the 2027 National Expenditure Program where it only has the total amount Php 50 billion, which might even decrease as it faces scrutiny within the plenary halls of both the House of Representatives and Congress, the options provided to the entire defense establishment might limit itself to just buying surface assets and light FA-50 fighter trainer jets, which might not suffice for territorial defense.
All it takes now is for the movement of the House Bill No. 8059 to push beyond committee level and even to the interpellations of the plenaries until such a point that it reaches the president’s desk for it to get a signature that effectively makes it a law.
For now, the lack of urgency only restricts the planners within the defense department in expanding the capabilities of the Armed Forces of the Philippines, one that is badly needed when facing a far more advanced adversary, all in the name of minimum credible defense posture.
(c) 2026 PDA.
Published from a station in Eastern Visayas.
