Gov’t to spend P527B on infrastructure in next 4 yrs

The Arroyo administration plans to spend P527 billion for infrastructure development over the next four years, saying that generating a budget surplus would not be critical to economic planning as long as the budget stays balanced.

Amid fears that sustained budget compression would hold back growth if not reversed, budget officials said the government needs to catch up with the growth momentum and make critical public investments beginning this year.

The Department of Budget and Management (DBM) said yesterday that the preliminary 2008 national budget has been pegged at P1.2 trillion based on existing economic growth targets.

By 2009, Budget Secretary Rolando Andaya Jr said the National Budget would go up to P1.4 trillion and finally to P1.6 trillion at the end of the Arroyo administration in 2010.

Under this budget scenario, Andaya said the government would have at least P527 billion that it could use for infrastructure development that would bring the country’s infrastructure spending at par with its neighbors.

Andaya said the so-called Plan 789 has not been discussed by the Development Budget Coordinating Committee (DBCC) so the three-year budget is still based on the existing macroeconomic targets approved by the committee thus far.

According to Andaya, the government was generating fiscal flexibility for the first time in many years but this did not mean that fiscal consolidation necessarily meant accumulating a budget surplus.

"I personally think there is any need to generate a budget surplus after we have balanced the budget," Andaya said. "If there are things we need to do, we should do them when we can afford to do so, as long as the budget stays balanced."

Andaya said the government would have to strike a balance between the need to spend on infrastructure development, health and social services while reducing its total debt stock.

"After servicing our obligations, we should prioritize infrastructure because that will be followed by growth," he said. "Debt reduction or prepayment could be done along with that."