The aggressive infrastructure push is expected to help the economy recover faster this year. — PHILIPPINE STAR/MIGUEL ANTONIO N. DE GUZMAN

INFRASTRUCTURE SPENDING reached P681 billion in 2020, 22.7% lower than the previous year (P881.7 billion) but exceeded the downscaled P609-billion target by 12%, it said on Thursday.

State spending on infrastructure projects reached P276.1 billion in the fourth quarter, 27.89% smaller than the P382.9 billion spent during the same period in 2019, based on the data provided by Budget Assistant Secretary Rolando U. Toledo citing preliminary data.

In an online press conference, Acting Socioeconomic Planning Secretary Karl Kendrick T. Chua said infrastructure spending in the fourth quarter surpassed the P225.5 billion target by 22.4%.

Mr. Toledo said the data for the fourth quarter included the National Government’s total spending on infrastructure, plus the infrastructure components of transfers to local government units and subsidies or equities to government-owned and -controlled corporations (GOCCs).

The government slashed the budget for infrastructure projects last year, as it realigned funds for the pandemic response.

The target infrastructure investment fell to 4.5% of gross domestic product (GDP) in 2020, from the 5.4% ratio in 2019.

For this year, the budget for the sector is expected to reach P1.2 trillion, or equivalent to 5.9% of GDP.

“With a multiplier of 2.27, meaning every peso spent creates another P1.27, some 1.7 million jobs can be created to accelerate the recovery. Timely implementation of infrastructure projects will have the biggest impact on our recovery prospects,” said Mr. Chua during the press conference.

The aggressive infrastructure push is expected to help the economy recover faster. Economic managers are targeting a 6.5-7.5% growth this year.

Mr. Chua said the extended validity of the 2020 budget will also help boost spending.

Emilio S. Neri, Jr., the lead economist at the Bank of the Philippine Islands (BPI), noted the government’s underspending, especially in infrastructure, poses a downside risk to the 2021 rebound.

“With businesses still struggling, the lack of fiscal support and public construction may stall the recovery and dampen the demand for capital goods,” Mr. Neri said in a note to journalists on Thursday.

Think tank Oxford Economics said the state should further relax quarantine restrictions to allow infrastructure projects to resume, barring another big coronavirus outbreak.

Aside from limited resources, construction work was hampered by ongoing mobility and travel restrictions, as well as health safety protocols. — Beatrice M. Laforga