Infra spending further slows in August lingering impact of budget delay, election ban

MANILA, Philippines — Government spending on infrastructure continued to decline in August due to the lingering impact of the 2019 budget delay and the election ban on public works, as well as base effects from last year, the Department of Budget and Management (DBM) reported yesterday.

According to the latest disbursement report of the DBM, infrastructure spending and other capital outlays reached P59.3 billion in August, 13.2 percent lower than the P68.4 billion recorded in the same month last year.

“Infrastructure and capital outlays were lower by P9 billion year-on-year to end up at P59.3 billion due to the delays in the implementation of new projects, which stemmed mainly from the late passage of the 2019 budget and the election ban,” DBM said.

Budget Undersecretary Laura Pascua said the decline could also be due to high base effects from last year.

“The growth of infrastructure in 2018 exceeded expectations. By December, I recall that a 43 percent growth was recorded and the acceleration began early in the year. Hence, the decline is really a base effect,” Pascua said in a text message to The STAR.

From January to August, cumulative infrastructure expenditures amounted to P446 billion, an 11.8 percent decline from the P505.6 billion recorded in the same period a year ago.

Including equity and capital transfer to LGUs, the DBM said total capital outlays as of end-August dropped by 13.7 percent to P538.4 billion compared to P624.1 billion in 2018.

Despite the decline in infrastructure spending, government disbursements last August rose by 8.8 percent to P282.2 billion from P259.5 billion in the same month last year.

Year-to-date, total expenditures inched up by 0.9 percent to P2.21 trillion compared to P2.19 trillion in the same period in 2018.

The DBM said the growth in disbursements last August was mainly driven by subsidies to government corporations, which jumped more than six times to P31.8 billion from P5 billion a year ago.

Personnel services and maintenance expenditures also rose to P74.4 billion and P36 billion, respectively.

For September alone, the DBM said it is expecting higher disbursements as agencies had utilized their remaining notices of cash allocation (NCA) before they lapsed at the end of the quarter.

The DBM said agencies are also trying to catch up with their respective spending programs.

“Initial data from Modified Disbursement System-Government Servicing Banks (MDS-GSBs) indicate that disbursements grew by about 40 percent year-on-year. This hopefully signals a faster rate of spending for the remaining months to keep up with the P3.774 trillion target for the year,” the agency said.

The budget department also noted that there are still P316.2 billion in funds yet to be released from the P3.66 trillion obligation program for 2019.

Citing preliminary reports on allotment releases, the DBM said some P145.1 billion worth of allotments have been issued in September.

The DBM said some of the big-ticket allotments, which could drive the growth of disbursements for the month, include releases for the health insurance premiums of senior citizens enrolled in the National Health Insurance Program (P29.8 billion), Unconditional Cash Transfer (UCT) Program (P18 billion), and right-of-way requirements of the Department of Transportation (P13.3 billion).