Economic managers are reducing the budget allocated for infrastructure projects this year and 2021, even as a World Bank report showed the Philippines’ road, power and water infrastructure remain inadequate.
The Development Budget Coordination Committee (DBCC) in a July 28 meeting approved this year’s infrastructure program at P785.5 billion, equivalent to 4.2% of nominal gross domestic product (GDP) at P18.85 trillion. The infrastructure budget was tweaked three times from the initial program of P989 billion, as the government realigned funds for its pandemic response.
For 2021, the DBCC also cut the infrastructure budget to P1.121 billion, representing 5.4% of GDP, from the previous estimate of P1.131 trillion or 5.3% of GDP.
The infrastructure budgets were trimmed even as the government raised the expenditure program to P4.335 trillion this year and P4.467 trillion in 2021, from the previous estimates of P4.1 trillion and P4.2 trillion, respectively.
Budget Undersecretary Laura B. Pascua said the estimated infrastructure spending for next year can still change as the agency finalizes documents for next year’s budget.
Meanwhile, the economic team raised the projected disbursement program for 2022 to P4.677 trillion, from the original P4.452 billion. Infrastructure spending was set at P1.018 trillion, or 4.5% of GDP.
Economic managers were banking on the economic and jobs impact of infrastructure spending in pump-priming the economy that is seen to slump by 5.5% this year.
In its “Infrastructure in Asia and the Pacific” report, the World Bank said road-quality surveys showed road infrastructure in the Philippines is considered as “very poor.”
“Manila, in particular, is challenged by heavy congestion. Although surface conditions have improved, more than one in four roads has a poor surface condition, largely attributable to underinvestment and lack of maintenance, especially in rural areas,” the report said.
While the Philippines is among emerging economies that had high rates of rural access to roads, above 60% level, along with Sri Lanka, Vietnam, the World Bank said the quality of the road infrastructure has to be improved.
“Access to road infrastructure is not enough to attain trade and transit development goals. The quality of road infrastructure is also an important factor in minimizing the transaction costs of travel and trade and improving the efficiency and resilience of road networks,” the report said.
On electrification, access to electricity in rural areas went up significantly when the government launched its rural-electrification program in 2016.
“Although access is widespread, and losses are low, energy consumption per capita is also very low. This implies that generation capacity is inadequate to meet rapidly increasing demand,” the World Bank said.
The World Bank said the Philippines still has a “reasonable coverage” in terms of water and sanitation at 38% of the urban population across Luzon, Visayas and Mindanao.
Compared to regional peers, however, access remains limited while the quality of water and wastewater treatment facilities were still “very poor.”
The World Bank said the Philippines is among the countries that need to “connect users to water-supply networks.”
The report also showed Manila had the second highest in purchasing-power-parity-adjusted water tariff in the region at $1.8 per cubic meter for first 15 cubic meters per month, only behind Male, Maldives which has $5.8 per cubic meter.
The country has also one of the highest average retail electricity tariff against the operational cost in generating electricity in East Asia.
“The results suggest that there are marked differences in access to and quality of services between countries (particularly, between low- and medium-income East Asian countries, and between ASEAN, South Asia, and the Pacific Islands), as well as between rural and urban communities,” the World Bank said.
The World Bank’s report assesses the status of access, quality, and costs of infrastructure service among high-income countries and emerging economies in the region. — Beatrice M. Laforga