Economic growth in the Philippines slumped to 4.0% in the third quarter of 2025, the slowest growth rate since the pandemic and lockdown induced recession in 2021, despite sustained and significant increases in government spending. The present situation raises critical questions about the effectiveness of fiscal expansion under conditions of rising public indebtedness and sluggish private sector growth. This study evaluates the impact of fiscal policy using a Vector Autoregression (VAR) model estimated on quarterly data from 2010 to 2025; focusing specifically on government expenditures, household consumption, gross capital formation, and GDP. The resulting model projects full-year 2025 growth at 4.39% and 2026 growth at 4.16%, well below the recent three-year average of 5.97%. Impulse response analysis reveals that government spending produces a weak initial GDP multiplier of only 0.15 on impact, generating just 15 centavos per peso spent. Moreover, the government expenditure multiplier turns negative within just one quarter at -0.42 and reaches a trough of -4.26 by the third quarter, suggesting severe crowding-out effects. In contrast, household consumption generates robust and stable multipliers averaging 1.44 across all horizons, meaning each peso of household spending produces 1.44 pesos of GDP. Gross capital formation exhibits moderate positive multipliers averaging 0.64 over one year. These findings indicate that fiscal multipliers in the Philippines may have turned negative given significant expansions in the government debt, budget deficit, and growing crowding out pressures. Moreover, the results are consistent with extant literature expounding on sorely constrained fiscal multipliers in heavily indebted developing countries. The results point to an urgent need to reassess prevailing expansionary fiscal strategies, curtail deficit spending, and pivot toward measures that support household consumption and private sector investment-led growth.