Infra spending seen to push Philippine growth up to 8% this year

MANILA, Philippines — The rate of public spending on infrastructure and accelerated pace of project completion would enable the Philippines to post a seven to eight percent growth rate this year, said First Metro Investment Corp. (FMIC).

In a statement, the investment banking arm of the Metrobank Group said the 32.4 percent growth in infra spending and other outlays in March is an indication that the government’s infrastructure program is “full steam ahead.”

“The construction of roads, police stations, and rehabilitation of schools accounted for the strong outlay in infrastructure resulting in a 30-plus growth on total government spending, which is seen to push economic expansion and hit the seven to eight percent target this year,” said FMIC.

The firm also noted that total government spending in the first quarter exceeded programmed spending, “suggesting that various reforms and programs are being implemented.”

“We can see that the government’s infrastructure program is full steam ahead. Not only has the Department of Public Works and Highways (DPWH) managed to expand work by double digit pace in the 11 of the last 12 quarters, a new acceleration has also been evident in the last four quarters. From 12 percent growth in the second quarter of 2017 (year-on-year), this has reached 25.1 percent in the first quarter of 2018,” said First Metro president Rabboni Francis Arjonillo.

FMIC noted that in 2012, DPWH had a budget of only $2.5 billion, but this year the budget was raised to $13 billion, more than five times the amount six years ago.

The firm said it also took a sample of DPWH’s 35 projects valued at P22.6 billion which started in late 2016 to 2017 and scheduled to be completed in late 2018. Based on the latest report of DPWH, these projects are 67 percent complete on the average, suggesting these are on track and would be finished as scheduled.

“Clearly the national government is moving fast to enable it to accomplish a substantial part of its Build Build Build program,” Arjonillo said.

FMIC said PPP projects are also moving faster as the new Right of Way Act and implementing regulations appeal to more landowners.

“The new Right of Way Act and implementing regulations appear to convince landowners that this ROWA system is more just and, thus, less resort to expropriations would be needed,” said the firm.