Government investments hit record high P940 billion in 2018

MANILA, Philippines — The Department of Finance (DOF) said the Philippines recorded a record high national government investments of P940 billion last year as it continued to ramp up its infrastructure build up.

Finance Undersecretary Gil Beltran said in the agency’s latest economic bulletin national government investments last year was 37.2 percent higher than the P685.3 billion in 2017.

Beltran said national government investments rose by an average of 39.7 percent between 2016 and 2018.

As a percentage of gross domestic product (GDP), Beltran said national government investment improved to 5.4 percent last year from 4.34 percent in 2017.

Beltran said the amount of investments as well as its share to GDP were the “highest in the country’s history.”

A regression analysis using data from 2010 to 2018 showed that national governmen investments has been very efficient, with rates of return exceeding borrowing costs, currently at 5.9 percent per annum based on the 25-year treasury bond rate, according to Beltran.

“National government investment is strongly correlated with GDP growth, the economic rate of return is computed at 29.9 percent for the current quarter’s investment and 17.4 percent for the previous quarter’s investment,” he said.

According to Beltran, this compares favorably with 9.7 percent return for current quarter’s private investment and 7.9 percent for the previous quarter.

Beltran cited the fact that the infrastructure projects of the national government undergo stringent project evaluation by the Investment Coordination Committee where major national projects costing P2.5 billion or more are vetted by seven agency-members before implementation.

The project must be a part of the Public Investment Program in the Philippine Development Plan and must satisfy the economic viability criterion.

He said project procurement undergoes an open, transparent bidding process with terms of reference published in the Philippine Government E-Procurement System.

Furthermore, Beltran said the project must be implementation-ready before the Department of Budget and Management provides an allocation for it in the draft national government budget.

Many of these projects, he said, should have been implemented years ago.