Still below target: Government infra spending up 24.3%

MANILA, Philippines - Government infrastructure spending accelerated by almost a quarter in the first nine months, but remained below program during the review period, the Department of Budget and Management (DBM) reported yesterday.

In a statement, the DBM said a total of P243 billion was spent for infrastructure and other capital outlays from January to September, up 24.3 percent year-on-year, but still 16 percent behind the P289.3 billion target.

This was despite a 50-percent surge in infrastructure spending to P28.8 billion in September.

Budget Secretary Florencio Abad decided to focus on the double-digit increases in spending by saying reforms to accelerate disbursements have been effective.

“The robust third quarter performance shows that our efforts to fix spending bottlenecks are working,” Abad said.

According to the DBM, infrastructure allotments for the first nine months included aircraft acquisitions of the Armed Forces of the Philippines, which saw the arrival of two fighter jets from South Korea this month.

The Departments of Tourism as well as Public Works and Highways also contributed, with the “construction, repair and rehabilitation of roads and bridges” connecting tourist destinations.

Basic educational facilities such as construction of classrooms were also tagged for the increase, the DBM said.

Despite the increase, infrastructure spending was still behind the Aquino administration’s goal when considered together with the expansion of the economy.

As of the third quarter, infrastructure expenditures accounted for only 2.55 percent of gross domestic product (GDP). GDP is the sum of all products and services created in an economy.

The government is targeting an infrastructure-to-GDP ratio of four percent this year, equivalent to P574.3 billion by year-end. In 2016, the goal was set at 5.1 percent.

Traditionally, a five-percent ratio is recommended to keep pace with a growing population, which the World Bank recommends to expand at around two percent a year.

“As far as this administration is concerned, I don’t think they ever met a target in terms of disbursements, which is disappointing,” said Nicholas Antonio Mapa, economist at the Bank of the Philippine Islands, in a phone interview.

He said while the double-digit growth looks good, part of its was driven by base effects from last year’s slowdown in disbursements.

“At a time we needed to pump prime the economy to prepare for the (US) Fed hike, the government still failed to meet its target,” Mapa said.