Brief lockdowns sink infrastructure outlays to 3-month low

MANILA, Philippines — State infrastructure spending sustained a pandemic-induced contraction in August, settling at its lowest level in 3 months after brief lockdowns in Metro Manila and key economic areas hampered construction anew.

Capital outlays plummeted 18.4% year-on-year in August to P61 billion, data from the Department of Budget and Management released on Monday showed. 

Compared to July, when infrastructure spending returned to the negative territory after a month of double-digit annual growth, capital outlays sagged 15%. The monthly spending was the lowest since May’s P54 billion when most of the archipelago was still under broad lockdowns.

The budget agency said the 15-day implementation of modified enhanced community quarantine — a stricter form of movement restrictions — in Metro Manila, Laguna, Rizal, Bulacan and Rizal resulted in “unintended delays” in construction activities, which was worsened by the rainy season that disrupted construction activities.

Ruben Carlo Asuncion, chief economist at Union Bank of the Philippines, agreed with the DBM's assessment. “This is most probably again because of the impact of COVID-19 and the containment measures employed to slowdown the coronavirus spread,” Asuncion said in a text message.

“This is somehow expected and probably aggravated by the usual challenges on bureaucracy and absorptive capacity,” he added.

Another month of weak infrastructure spending is creating a big headache for the Duterte administration, which is banking on its flagship “Build, Build, Build” program to propel the economy back to its glorious days before the pandemic struck. 

From January to August, infrastructure spending amounted to P513.4 billion, still down 4.6% year-on-year, albeit much slower than the double-digit shrinking in previous months.

Breaking down the outlays, P44.3 billion went directly to nationally-funded infrastructure projects, but the amount was 25.4% down from last year. For the first 8 months, this segment amounted to P394.5 billion, down 11.5% annually.

Meanwhile, the balance of P16.7 billion was given to towns, cities and municipalities in August to assist on building infrastructure in their localities, up 9.2% year-on-year. The latest amount increased the 8-month allocations to local government units 28.9% year-on-year to P118.1 billion.

No money went to state corporations last August, data showed. So far this year, government-run companies have received P800 million, down 2.6% year-on-year.

Despite the latest dismal outturn in infrastructure investments, the budget department is optimistic “big-ticket releases” in the coming months “could drive the growth of disbursements for the rest of the year.”

“Infrastructure and other capital outlays will likely remain muted with the discontinuance of some capital outlay projects which can no longer be implemented nor completed due to the pandemic,” the agency said.

“Nonetheless, both the Department of Public Works and Highways (DPWH) and Department of Transportation (DOTr) remain committed to accelerate implementation and make most of the remaining months of the year to complete or partially complete priority projects,” it added.