Infra spending jumps 25% in July

MANILA, Philippines — The government spent P48.4 billion on infrastructure projects in July, up 25 percent year on year, the Department of Budget and Management (DBM) reported.

This brought infrastructure spending to P297.5 billion in the first seven months of the year, up 11.1 percent.

The DBM attributed the increase in capital expenditures in July to the implementation of road and transport projects, acquisition of military equipment and construction of health facilities.

According to the DBM, the Department of Public Works and Highways (DPWH) continued to implement flood control, road improvement and road widening projects in July.

The Department of Transportation, meanwhile, recorded an increase in expenditures due to right-of-way acquisition for the Southwest Integrated Transport System and the completion of civil works for the LRT-2 East Extension project.

The Armed Forces of the Philippines also acquired naval and air defense assets under its modernization program, while the Department of Health purchased equipment and other infrastructure outlays under its health facilities enhancement program.

Infrastructure projects form part of the government’s capital outlays, which also increased 11.5 percent to 58.7 billion in July, and 10.2 percent to P389.9 billion year-to-date.

Other forms of capital outlays are equities or investments of the national government in the authorized capital stock of state corporations, and capital transfer to local government units.

DBM data showed the government did not invest in equities last July, while capital transfers to LGUs grew 21.9 percent to P10.2 billion.

The Bureau of the Treasury earlier reported that government spending, as a whole, climbed 11 percent to P245.1 billion in July.

According to  DBM, the double-digit growth in disbursements in July indicates the “government has gotten past the adjustment stage or transition period.”

“This gives us optimism that the growth of government spending will be sustained until the end of the year. This expectation is supported by the spending behavior of line agencies,” the agency said.

The DBM added that disbursements usually pick up during the last month of every quarter as agencies utilize their cash allocations before they lapse at the last working date of the quarter.

“Also, based on historical trend, disbursements are usually higher in the fourth quarter as the implementation of government programs and projects is accelerated or completed before the year ends and ahead of the closing of books,” the DBM said.

Budget Secretary Benjamin Diokno earlier said underspending was “a thing of the past” as the agency has been instituting reforms to improve the absorption capacity of state agencies.

Among the reforms being pushed is the shift from obligation- to cash-based budgeting and the shift from a two-year validity of appropriations to one year.

Sustained public spending on infrastructure can create more than one million new jobs annually and accelerate economic output, said Socioeconomic Planning Secretary Ernesto Pernia.

The government has committed to increase spending on infrastructure from 5.32 percent of the gross domestic product (GDP) this year to more than seven percent by 2022.

If public investment is sustained at this pace, Pernia said growth in GDP may grow by an additional 1.4 percent annually in six years. Accelerated building activity will also create around 1.1  million additional jobs every year.

The government has identified 75 flagship projects for approval and implementation until 2022. Out of these, 75 had  already been approved by the National Economic and Development Authority (NEDA) Board.

Among the priority projects of the government are the Malolos-Clark Airport-Green City Rail Project, New Centennial Water Source Project, Chico River Pump Irrigation Project, Phase 1 of the Mindanao Railway, the New Cebu International Container Port, and the Davao, Bohol, Laguindingan, Bacolod, and Iloilo Airports.

“Most of these projects are in the regions. This affirms the government’s strategy to aggressively pursue rural and regional development, and to spread economic growth outside Metro Manila,” Pernia said.

 The NEDA is also validating the Public Investment Program 2017-2022, which contains 5,600 priority programs and projects of various national government agencies comprising both hard and soft infrastructure.

Various sectors and industries will benefit from the government’s ambitious infrastructure development program.  These include construction, wholesale and retail trade, food manufacturing, non-metallic mineral products, ownership of dwellings, electricity, communication, land transport, petroleum and other fuel products, and wood, bamboo, cane, and rattan.