MANILA, Philippines — Negotiations between Lockheed Martin and the Philippine government over the potential purchase of F-16s continue, but the deal remains in limbo while officials here seek ways to break the fiscal deadlock that has hounded the fighter jet acquisition program.

Earlier this week, the Philippine ambassador to the U.S., Jose Manuel Romualdez, said the Philippines is “not closing its doors” to the possibility of acquiring the American jets, but it would take “imaginative and creative ways” to fund the program.

Late last year, Romualdez said acquisitions are “on hold” due to funding, which is being allocated to other projects.

Defense Secretary Gilberto Teodoro told reporters in Camp Aguinaldo in November that he had returned Lockheed’s proposal, which carries a $5.58 billion price tag for 20 F-16 Block 70/72 with AN/APG-83 AESA radars and the establishment of a research and training center in the Philippines.

“It was beyond the approved budget ceiling, so they have to resubmit [some documents]. Anything is under consideration. What is not in consideration right now—which should be considered—is the funding,” Teodoro said.

The Philippines has an ongoing bid to refresh its fleet after retiring 10 Northrop F-5 A/B Freedom Fighters in 2005.

To fill operational gaps, the government acquired 12 FA-50 combat jets in 2015 and last year signed the deal for another fleet. The FA-50s were to serve as trainer jets before the air force’s upgrade to more advanced warplanes.

The defense department is reportedly looking at purchasing around 40 multirole fighter jets under the existing modernization program. But funding remains the bigger problem.

Of 188 projects under a three-phase Horizon military modernization program, only 59 have been accomplished so far due to limited appropriations.

In 2025, Congress slashed the proposed 50 billion pesos ($863 million) fund down to 35 billion pesos, which derailed six projects.

While the country’s defense budget jumped by 12.3% at 310 billion pesos ($5.35 billion) this year, modernization funds stagnated at 40 billion pesos ($691 million).

“Let’s stop kidding around. If we only get 40 billion pesos every year, let’s just do project-based programs and opt for loans with longer financing terms,” Teodoro told lawmakers during last year’s deliberations.

Congress, however, increased “unprogrammed” funds — or allocations that could be funded if cash becomes available by year’s end — to 50 billion. But budget experts say these funds are too iffy to serve as planning assumptions.

The F-16s are not the only options on the table for Manila. The department has received pitches and is in discussions for Saab’s JAS Gripen E/F, Leonardo’s Eurofighter Typhoons, and Korea Aerospace Industry’s new KF-21 Boramae.

When asked if the defense department had already chosen a warplane, Teodoro said: “Give me the funds today, I’ll make the decision.”