By Beatrice M. Laforga
Reporter

THE government will boost spending this year including on infrastructure and social programs to shield the economy from the effects of the coronavirus disease 2019 (COVID-19) pandemic, softer global demand, and the Taal Volcano eruption at the start of the year, according to the Budget department.

“Nonetheless, the government will remain prudent with public expenditures to ensure long-term fiscal sustainability,” it said in a statement.

Infrastructure spending more than doubled to a record P177.9 billion in December from P75.6 billion a year earlier, data showed.

This brought total infrastructure spending to P881.7 billion last year, 9.7% higher than a year earlier and bigger than the 859.4-billion target, the Budget department said.

The agency traced the December spike to disbursements by the Department of Public Works and Highways (DPWH) that rose by 86% year on year.

DPWH finished road and bridge projects including the Bayombong-Solano bypass road and Tagum City flyover. It also completed right-of-way acquisitions, bridges, and flood mitigation structures and drainages at the Agno river basin and Cagayan river, the Budget department said.

The infrastructure spending surge was largely due to government “catch-up efforts,” said Ruben Carlo O. Asuncion, chief economist at UnionBank of the Philippines, Inc.

“We all know that the efforts were not enough to breach the 2019 growth target due to historical and perennial low absorptive capacity of government agencies and institutions implementing infrastructure projects,” he said in an e-mail. “Although some have improved, most are still challenged.”

Catch-up measures included a 24/7 work schedule for the construction of big infrastructure projects and streamlining right-of-way acquisitions, the Budget department said.

The economy grew by 5.9% last year, slower than 6.2% in 2018 and missing the government’s revised 6-6.5% goal.

Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said state spending, which accounts for 11-12% of the gross domestic product, would be one of the biggest growth drivers this year.

Mr. Asuncion said increased infrastructure spending this year is part of the much needed fiscal stimulus to boost the economy amid the COVID-19 global pandemic.

“Infrastructure expenditure is critical and needed at this juncture where demand and supply have been dampened,” he said. “It will help pump-prime the macroeconomy in the next coming months.”

Mr. Ricafort said the outbreak could disrupt logistics and supply chains of various infrastructure projects even if supplies and workers are exempted from the month-long lockdown in Metro Manila.

“Additional spending should be moved forward to help rescue firms hardest hit by the coronavirus spread,” the analyst said.

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