MANILA, Philippines — Caught off-guard, the Duterte government lost its chance to ramp up infrastructure spending before the coronavirus disease-2019 (COVID-19) outbreak hit, with capital outlays down as of February.
In a spending report released Tuesday, the Department of Budget and Management (DBM) said capital outlays inched down 1.8% year-on-year to P60.1 billion in February.
For the first two months, infrastructure spending, inclusive of fund assistance to local governments for the same purpose, slumped by a faster 14.3% to P119.2 billion, budget data showed.
Broken down, the two-month drop was propelled by a 20.7-percent decrease in direct infrastructure spending from the national government. From P118.4 billion same period a year ago, infrastructure disbursements went down to P93.9 billion.
“The decrease is mainly attributed to the base effect of high infrastructure expenditures in the same period last year” DBM said.
Specifically, the Department of Public Works and Highways (DPWH) paid bills worth P82.2 billion with contractors in the first two months of 2019, settlements which for this year only amounted to P35.2 billion. This, in effect, pulled down the entire spending figures, only partly tempered by P13 billion shelled out for military equipment purchases.
The latest spending report highlights the government’s persistent struggle to spend large infrastructure budgets, which for this year amounts to a record P939 billion. Last year, that challenge was nearly missed if not for a last-minute spending surge in December that helped capital outlays breach target by 0.7% to P1.04 trillion.
Disruptions in infrastructure rollout became more formidable this year with the COVID-19 global pandemic and national and local lockdown halting infrastructure work in March and April. DBM also repurposed a tenth of funds for infrastructure yet to be released to agencies for succeeding months for COVID-19 response, making the contraction in February more devastating as it looks like.
“While disbursements for March, and consequently the first quarter of this year, will be higher year-on-year, spending will likely be lower than the program with the temporary delays in program/project implementation,” DBM said.
Ruben Carlo Asuncion, chief economist at UnionBank of the Philippines, said there is no hope in sight for infrastructure during the dry season when work typically accelerates because of the lockdown. "However, when the lockdown is lifted, it is hoped that a lot of construction will resume," he said in a text message.
The programmed capital outlays for this year amounted to P829.4 billion, up 17.9% year-on-year from last year. This amount does not include funds left unreleased last year which can still be spent this year after a law was enacted extending the validity the 2019 outlay.
As of April 27, a total of P397.51 billion on capital outlays this year yet to be released to agencies were rechanneled to COVID-19 response, DBM data showed. These allocations, however, do not include funds for "Build, Build, Build" infrastructure agenda which Finance Secretary Carlos Dominguez III said would remain intact for recovery efforts after the outbreak.
“Existing programs, activities, and projects of the government will be reprioritized, reprogrammed, and realigned to the extent possible to augment the provision for priority health and social protection-related programs and other measures intended to contain the COVID-19 emergency and mitigate its impact to the economy,” DBM explained.