Infrastructure spending tops 2017 goal

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The budget department is moving to ensure government offices spend as planned.

By Melissa Luz T. Lopez
Senior Reporter

STATE infrastructure spending surged in 2017 to beat the official full-year target as work led by the Department of Public Works and Highways (DPWH) picked up, the Budget chief said on Wednesday, affirming the government’s aggressive spending push.

Budget Secretary Benjamin E. Diokno said the government spent P568.8 billion for infrastructure last year, jumping by 15.4% from the P493 billion disbursed in 2016.

The figure also surpassed the P549.4 billion programmed under the 2017 budget.

Mr. Diokno said this placed infrastructure investments for the year at roughly 5.6% of gross domestic product (GDP), higher than the planned 5.4% share and 2016’s 5.1%.

In a report on the country’s fiscal balance, the Department of Budget and Management (DBM) attributed the spending surge to the “acceleration” of infrastructure projects implemented by the DPWH.

“The agency also cited the prompt and regular submission of progress billings from contractors; faster and simplified process of approval of plans and programs; and strict implementation of project planning, monitoring and scheduling as among the factors which resulted in their higher-than-programmed disbursements,” the report read.

In December alone, infrastructure spending reached P82.3 billion, roughly a fourth more than the P66.9 billion spent the prior year.

Mr. Diokno attributed the spike to road projects across Luzon, Central Visayas and Mindanao; flood control, dike and river basin construction and repairs; and the purchase of military equipment.

Mr. Diokno also noted that many projects inherited from the 2010-2016 administration of former president Benigno S. C. Aquino III were under way last year, hence, adding to the spending surge.

Despite the hike in infrastructure disbursements, overall spending fell three percent short of the full-year program.

Mr. Diokno said this was due to lower-than-expected operating expenses, which include salary payments to government workers, interest payments and maintenance costs.

The government also paid bigger subsidies for housing and irrigation last year.

Government spending picked up by 11% to P2.824 trillion in 2017 but missed the P2.909-trillion spending target, according to Treasury data.

Revenues grew 13% to P2.473 trillion, posting the highest annual growth since 2013 and piercing the P2.427-trillion goal.

This led to a P350.6-billion deficit equivalent to 2.2% of GDP, lower than the three percent ceiling set by state economic managers.

“In the medium-term, infrastructure outlays under the Build, Build, Build program will exceed 5% of GDP and push GDP growth to its optimum level of 7-8% as the competitiveness of the economy rises and more jobs are created,” the Department of Finance said in a separate economic bulletin on Wednesday.

Mr. Diokno said he expects the spending surge to be sustained in the coming years, with more projects to be rolled out and with budget reforms to force agencies to spend more efficiently.

The government plans to spend P1.1 trillion on public infrastructure this year, forming part of the P8-9 trillion target until 2022.

Mr. Diokno said that spending plans will depend on the “availability or desirability” of financing options: whether through the annual budget, official development assistance or public-private partnerships.

“If we have the money… and if we want to use it as soon as possible, we use the GAA (General Appropriations Act),” the Cabinet official added.

The DBM will shift next year to a cash-based budgeting system wherein allocations can be spent only during the fiscal year, with an extension period of three months to settle payments for goods and services delivered and accepted within that year.

The transition started in 2017 as the DBM cut the validity of agency budgets to one year from two years.

“As it shows disbursements rather than obligations or commitments, a cash-based budget tends to reflect more accurately the annual outputs and actions of the government,” the DBM said in a separate statement.

The government plans to spend P3.364 trillion this year. As of end-January, the DBM has released 78.8% or P2.97 trillion of the P3.78-trillion national budget. Such stronger spending is meant to boost GDP growth to 7-8% from 2017’s 6.7% and 6.3% in 2010-2016.