Philippines infrastructure spending slows down in August

MANILA, Philippines — State infrastructure spending took another hit in August as ongoing project bidding and uncashed checks weighed on disbursements by the Department of Public Works and Highways (DPWH), while flooding across parts of Luzon dampened construction activities.

Latest data from the Department of Budget and Management (DBM) showed infrastructure and other capital outlays fell by 16.9 percent to P70.5 billion in August from P84.9 billion in the same period last year.

The DBM said the DPWH was affected by ongoing bidding for some projects, while most projects remained under implementation.

It also reported that P10 billion worth of checks issued to contractors and suppliers have yet to be encashed.

“Adverse weather conditions in August – particularly flooding across parts of
Luzon – also slowed construction activities for road infrastructure and rail transport projects,” the DBM said.

Acting Budget Secretary Kim Robert de Leon earlier said the government is counting on a pickup in public construction in the third quarter, as it tightened scrutiny and accountability over infrastructure projects more than a year after the flood control controversy erupted.

He said the DBM had made the necessary allotments available to the DPWH and expects the agency to accelerate project implementation in August and September to improve infrastructure spending figures in the third quarter.

But the anticipated recovery remained elusive.

Infrastructure and other capital outlays plunged by 34.6 percent to P522 billion in the January-to-August period from P798.4 billion a year earlier, reflecting the continued weakness in DPWH disbursements.

“The decrease was largely reflective of the lower DPWH disbursements, as procurement compliance, oversight of ongoing projects, payment claims verification and contractor documentation were strengthened,” it said.

These measures are intended to protect public works spending by ensuring that payments are made only for properly validated and documented work, it added.

The DBM said spending on other public infrastructure projects helped cushion the decline, including the construction of school facilities, hospitals and farm-to-market roads by the Department of Education, Department of Health and Department of Agriculture, respectively.

Defense modernization projects and rail and mass transport projects also tempered the decline in infrastructure disbursements during the period.

Overall government spending, meanwhile, improved by eight percent to P4.27 trillion in January to August from P3.95 trillion in the same period last year.

For the rest of the year, the DBM said it issued P121.8 billion in allotments in September covering agency personnel services requirements, capital outlays and programs and projects in education, health, social protection, transportation, agriculture, local government support, defense modernization and other obligations.

Of this, the agency released P15.4 billion to the DPWH for various capital outlays, mostly for the loan proceeds requirements of foreign-assisted projects.

It also issued P2.6 billion to the Department of Transportation for the implementation of five locally funded airport projects.