By Jenina P. Ibañez, Senior Reporter

GOVERNMENT TRANSPORT and flood control projects boosted state infrastructure spending in October, according to data from the Budget department, in a potential boost to the Philippine economy.

Spending on infrastructure and other capital outlays rose by 6.7% to P60.9 billion, though this was lower than P71.2 billion a month earlier, when expenditures surged by 25% year on year.

“The increase is accounted by the implementation of various infrastructure projects of the Department of Public Works and Highways (DPWH),” the Budget department said in a report on Thursday.

The government is under pressure to revive an economy that  shrank by 9.6% last year — one of the worst in Asia and the Philippines’ deepest recession since World War II — after enforcing one of the strictest and longest coronavirus lockdowns in the world.

Economic managers last week said infrastructure spending this year could hit P1.095 trillion, higher than the P1.019 trillion it had programmed and accounting for 5.6% of economic output.

DPWH projects in October included construction, maintenance and repair work on roads, bridges, flood control and drainage systems, along with the construction of multi-purpose buildings, the Budget department said.

The direct payments made by development partners for the various foreign-assisted road network and flood control projects of the DPWH and the foreign-assisted rail transport sector projects of the Department of Transportation also contributed to the said increase,” it added.

The slower year-on-year growth was likely due to the higher base in 2020, when the economy started to reopen in the second half after lockdowns were enforced to contain the pandemic, said Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp.

“Wider budget deficits that resulted in more borrowings and overall debt after the lockdowns earlier this year could have also slowed down the growth in infrastructure spending,” he said in a Viber message.

“Nevertheless, the year-on-year growth in infrastructure spending remains decent and similar to the latest gross domestic product growth of 7.1% in the third quarter.”

Infrastructure and capital outlay spending in the 10 months to October increased by 38.1% to P702.4 billion.

“Government spending especially on infrastructure could still pick up in the coming months in preparation for the May 2022 elections especially in view of the election ban on some public works,” Mr. Ricafort said.

“The timely approval of the 2022 national budget and the carry-over of unused funds for 2021 up to end-2022 would also fundamentally lead to continued growth in infrastructure spending,” he added.

The ban on public works starts 45 days before general elections, or from March 25 to May 8, 2022. The law, which also prohibits social welfare dole-outs during the period, seeks to prevent politicians from using state resources for their election campaign.