THE COUNTRY’s Budget chief expects infrastructure spending last year to have closed in on the government’s program.
Budget Secretary Benjamin E. Diokno said that the share of infrastructure spending to gross domestic product (GDP) likely settled at 6.2% last year, based on funds obligated in the 11 months to November, against an official 6.3% full-year program for 2018.
“Infrastructure spending surged to 6.3% of GDP in 2017 and is projected to hit 6.2% of GDP in 2018, almost tripling the average two percent of GDP spent from 1986 to 2016. This is in line with the Duterte administration’s target of increasing infrastructure spending to more than 7% of GDP by 2022,” Mr. Diokno said in a press briefing on Wednesday in Mandaluyong City.
The infrastructure spending-to-GDP ratio — based on obligated funds and not actual payments — is targeted to hit 7.3% by 2022, when President Rodrigo R. Duterte ends his six-year term, from this year’s 6.3% target.
The government is shifting to a cash-based spending scheme starting with the proposed 2019 national budget that accounts for only actual payments to contractors in a fiscal year plus a six-month extension. Under this scheme, infrastructure spending-to-GDP is programmed at 4.7% this year, rising to seven percent by 2022.
“As long as the Senate and the House act on the budget, then we’ll probably hit it. The 2018 budget was extended [since Congress has yet to ratify the proposed P3.757-trillion 2019 national budget]. There were some appropriations released but have yet to be obligated, so that will help,” Mr. Diokno said.
“And depending also on the speed on how we contract our foreign loans, so I’m optimistic that we’ll hit the target for this year.”
Expecting the 2019 budget to be operational before the end of this quarter, Mr. Diokno said that the government is preparing a catch-up plan to mitigate the impact of the delays in implementing new projects as well as the 45-day halt of public works before the May 13 mid-term legislative and local elections. The catch-up plan includes hiring of more workers in the construction of infrastructure projects and longer working hours.
“The best time to build is during the first six moths of the year, but depending on the weather pattern. But with climate change hindi mo na alam kung ano ang tagulan… (we no longer know when to expect rains) so if we miss that, we can still make up kung walang (if there are no) major typhoons. Some major projects are not susceptible to the weather,” Mr. Diokno said.
“This fast-tracked spending performance addresses the country’s under-investment in infrastructure, which has severely dragged the Philippines’ economic performance in the past.”
The reenacted budget came as leaders of the House of Representatives late last year flagged alleged project insertions in the budget that favor select districts and a certain contractor. Earlier, House appropriations officials had also opposed the Executive’s proposed shift this year to a cash-based budget — which takes into consideration state offices’ limited spending capacities — from one that had appropriated funds for payments over two years. The shift resulted in a proposed budget of P3.757 trillion against 2018’s P3.767 trillion.
2019 GDP GROWTH ‘AT LEAST 7%’
In the same press briefing, Mr. Diokno also said that he expects economic growth to hit “at least seven percent” this year amid waning inflation.
Inflation’s spike for much of last year had been blamed for crimped GDP growth, since elevated overall price increases of widely used goods weighed on household consumption.
“We are confident this time we will hit 7-8% growth rate. At least seven percent,” Mr. Diokno said.
“And inflation will be much much lower this year. Our target is 2-4%, but as you know because of the base effects, we’ll probably end up closer to two percent than to four percent.”
This comes as the government late last year downgraded its economic growth forecast for 2018 to 6.5-6.9% due to inflation from 7-8% initially. GDP growth in the first three quarters of 2018 averaged 6.3%.
Government expenditures totaled some P3.095 trillion in the 11 months to November, up 24% year-on-year and equivalent to 92.5% of the P3.346-trillion 2018 downgraded disbursement target.
Latest data on infrastructure spending and other capital outlays show such spending settled at P665.1 billion as of October, growing 50.3% from 2017’s comparable 10 months.
Mr. Diokno said that latest available data have been “increasing the likelihood of zero underspending for 2018.” — Elijah Joseph C. Tubayan