THE GOVERNMENT increased its target spending for infrastructure projects through 2022 to support economic recovery, documents from the Development Budget Coordination Committee (DBCC) showed.
At its Dec. 3 meeting, the DBCC set this year’s infrastructure budget at P824.9 billion, up 5% from the reduced target of P785.5 billion adopted in July.
Despite the increase, this is still 16.6% lower than the original P989-billion budget for infrastructure programs, before the coronavirus forced the government to implement budget cuts and redirect funds for its pandemic response.
This will bring the infrastructure budget’s share of gross domestic product (GDP) to 4.5%, from 4.2% of GDP based on the reduced budget in July.
The DBCC also raised the infrastructure spending targets for the next two years. For 2021, the government aims to spend P1.170 trillion for infrastructure projects, up 4% from the previous goal of P1.121 trillion.
In 2022, the infrastructure spending goal was raised by 13% to P1.154 trillion, from the original P1.018-trillion target.
As a percentage of the overall economic output, the higher infrastructure budget will account for 5.9% of 2021 GDP (from 5.4%), and 5.1% of 2022 GDP (from 4.5%).
Latest data showed government spending on infrastructure fell 33% to P153.5 billion in the third quarter, but exceeded the reduced target for the period by 12%.
Year to date, infrastructure spending dropped by an annual 16.5% to P451.5 billion, but it beat the P430.9-billion target for the nine-month period by 4.8%.
The increased infrastructure spending target for this year is part of the government’s catch up plan to lift fourth quarter GDP, said Budget Undersecretary Laura B. Pascua in a Viber message late Tuesday.
The pandemic-induced recession continued in the third quarter after the economy shrank by 11.5% year on year, bringing the contraction in nine-month GDP at 10%.
“The 2021 (increased target) assumes the extension of the validity of the 2020 appropriations up to December 2021 and the Bayanihan II up to June 2021. The 2022 is based on the additional revenues coming in courtesy of DoF (Department of Finance (DoF),” she added.
The DBCC document noted that the revised infrastructure program can still be updated.
The estimates cover disbursements from the National Government’s budget on infrastructure, the infrastructure subsidy or equity given to state-owned firms, and transfers to local governments for their infrastructure projects.
The amounts include payables for those three years as well as the outstanding obligations incurred by agencies in the previous years.
Increased spending on infrastructure forms part of the country’s stimulus program to help the economy bounce back from the pandemic-induced recession.
The DBCC sees the economy contracting by up to 9.5% this year, before posting 6.5-7.5% growth next year and 8-10% growth in 2022.
Economic managers raised the projected government revenues and disbursements for this year, 2021 and 2022, after state collecting agencies — the Bureaus of Internal Revenue (BIR) and Customs (BoC) — exceeded their downgraded revenue targets since July.
Disbursements for this year are expected to hit P4.23 trillion (equivalent to 23.3% of GDP), 11.5% higher than in 2019, but lower than the P4.335 trillion projected in July.
Finance Secretary Carlos G. Dominguez III had said they want to extend the validity of this year’s budget to allow agencies to use unspent funds another stimulus package next year.
Projected revenue collections for the year were increased to P2.85 trillion (equivalent to 15.7% of GDP), from the previous target of P2.52 trillion.
For the next two years, estimated spending was hiked by four percent and six percent respectively to P4.662 trillion for 2021 (from P4.467 trillion, previously) and to P4.955 trillion for 2022 (from P4.677).
Economic managers have proposed a bigger, P5.024-trillion cash-based budget for 2022, equivalent to 22.2% of GDP which is 11.5% higher than the proposed P4.5-trillion spending plan next year.
“The proposed 2022 national budget will continue to prioritize funding for health-related responses and measures that will help accelerate economic growth,” the DBCC said in a joint statement during its meeting last week. — Beatrice M. Laforga