NDAA2026 makes available $1.5 billion for the Philippines

By Jayvee Vallejera

The National Defense Authorization Act for fiscal 2026 authorizes up to $1.5 billion in new security assistance for the Philippines to modernize its defense capabilities, including $500 million in direct grant assistance and up to $1 billion in loan guarantees from the U.S.

The 3,086-page bill now heads to the U.S. Senate. Senate leaders are working to pass the bill before lawmakers leave for the holiday break. 

Section 1269 of the FY26 NDAA, called “Report on Enhanced Defense Relations with the Philippines,” outlines and codifies the way in which the Pentagon and the U.S. Department of War intend to help bolster the defense capabilities of the Armed Forces of the Philippines in the face of the increasingly militant posture of China in the South China Sea.

The $500 million it proposes to make available as grant assistance would be disbursed over five years, from fiscal 2026 through 2030.

Of that amount, $500,000 will be used each fiscal year for training programs related to the defense needs of the Philippines.

This grant funding is not a bottomless well. The bill includes a sunset provision that sets Sept. 30, 2035, as the deadline for disbursing funds under this section.

In that same period, from fiscal year 2026 through 2030, the United States would make direct loans of up to $1 billion available to the Philippines. It will be up to the Philippines if it wants to tap this source of cash infusion.

The U.S. Secretary of State is charged with setting the interest rate for these loans, which must be repaid not later than 17 years after the loan is received. There will be a grace period of up to one year for repayment of the principal.

The FY 26 NDAA says the proposed funding assistance would accelerate Phase 3 of the modernization of the Armed Forces of the Philippines—called Horizon 3—which is intended to enhance the Philippines’ defense capabilities in response to increasing tensions in the South China Sea.

That includes making available modern equipment, training, and other support to safeguard the territorial sovereignty of the country, improve its maritime domain awareness, counter coercive military activities, and strengthen cooperation on counterterrorism-related efforts.

It also strengthens the U.S.-Philippines alliance and aligns with the agreement reached between the two countries at the 2+2 Ministerial Dialogue on Aug. 2, 2024.

A section of the FY26 NDAA requires the Defense Secretary to report to Congress each year until 2029 on what the United States is doing to enhance its defense relations with the Philippines.

The reports shall include evaluating how the U.S.-Philippines Bilateral Defense Guidelines is being implemented. These are agreements between the two that are designed to enhance military cooperation and clarify mutual defense obligations, particularly in response to threats in the South China Sea.

It will include plans for increased bilateral training, exercises, combined patrols, and other activities between U.S. armed forces and the military forces of the Philippines.

Similarly, the State Secretary is also required to report to Congress from 2026 until 2029 on the steps being taken to enhance the U.S.-Philippines defense relationship.

The FY26 NDAA also requires the Department of War to implement a strategy to expand basing agreements, intelligence sharing, command and control coordination, and military exercises not just with the Philippines but also with Japan and Australia.

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