Government infrastructure spending rises to P220 billion in Q1

Louise Maureen Simeon - The Philippine Star
Government infrastructure spending rises to P220 billion in Q1
Workers are seen performing their duties at a constructi site in Taguig on February 7, 2024.
STAR / Ernie Penaredondo

MANILA, Philippines — The government increased its infrastructure spending to almost P220 billion in the first quarter, mainly to finance road and defense projects, the Department of Budget and Management (DBM) said.

Based on the latest national government disbursement performance report of the DBM, state infrastructure expenditure and other capital outlays went up by more than 10 percent to P216.8 billion from January to March compared to last year’s P196.7 billion.

The DBM said this is due to the implementation of road infrastructure projects of the Department of Public Works and Highways (DPWH) and defense modernization projects of the Department of National Defense.

This was also driven by the higher local development fund of local government units (LGUs), which is equivalent to 20 percent of the national tax allotment shares.

“This helped sustain the robust expansion of public construction in the first quarter economic performance where general government-led construction grew by 12.4 percent,” the DBM said.

This contributed 2.9 percentage points to the 6.8 percent growth of the construction sector and about 0.4 percentage points to the overall 5.7 percent economic growth.

Meanwhile, overall government spending for the quarter reached P1.21 trillion, up by nearly 11 percent from last year’s P1.09 trillion.

Broken down, personnel services expenditures rose by five percent to P312.5 billion mostly due to the personnel benefits requirement of newly hired teaching personnel of the Department of Education.

Several positions in other agencies were also filled up, as well as the pension and retirement benefits of military and uniformed personnel were covered.

Combined allotment and capital transfers to LGUs grew by 13 percent to P259.9 billion on higher tax allotments following the Mandanas Ruling.

The tax revenue base, from which the tax allotment shares of LGUs this year is determined, was the actual tax collections in 2021— at a time when tax revenues were slowly recovering from the pandemic.

The government also recorded higher maintenance and other operating expenses (MOOE) to P198.4 billion due to assistance and subsidies for social services.

Interest payments likewise expanded by 36 percent to P193 billion due to coupon payments for domestic securities, downward adjustment to last year’s interest payments and larger foreign interest payments.

As of end-March, the remaining program balance amounted to P968.8 billion or roughly 17 percent of the record P5.768 trillion budget for the year.

The DBM said disbursements are expected to gradually increase in the current quarter as the DPWH and other agencies with capital outlay projects capitalize on the summer season for their construction activities.

It added that substantial MOOE requirements are also programmed this quarter for the implementation of banner social, employment, health, education and agriculture programs of the government.

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