The national government surpassed its infrastructure and other capital spending target last year, the Budget department said on Wednesday, with resources used for priority public works, defense, local governments and education projects.
Budget Secretary Benjamin Diokno said in a briefing that the administration spent P568.8 billion for infrastructure and other capital spending in 2017, 3.5 percent more than the P549.4-percent goal and also higher than 2016’s P493 billion.
In December alone, spending grew by P15.4 billion or 23.0 percent to P82.3 billion.
“The upward trend in capital outlays is proof of the roll-out of the Duterte administration’s ambitious infrastructure program,” Diokno said.
The Budget department tagged infrastructure projects implemented by the Public Works department, initiatives under the Armed Forces of the Philippines Modernization Program, the Capability Enhancement Program of the Department of Interior and Local Government and the Philippine National Police, and other capital outlay projects such as the repair and rehabilitation of Education department facilities and state universities and colleges.
Also cited as having facilitated disbursements were prompt and regular progress billings from contractors, faster and simplified approvals of plans and programs, and strict implementation of project planning, monitoring and scheduling.
ANZ Research economist Eugenia Victorino agreed that government spending had markedly increased.
“Isolating the infrastructure spending from the larger pot of total capital expenditure, we estimate that government spending on infrastructure has risen to 3.6 percent of GDP (gross domestic product) from the average of less than 2.5 percent from 2011 to H1 (first half) 2016. We have also seen the attendant rise in capital imports expected of a push for investment,” she told The Manila Times.
Still, Victorino noted that there was still some way to go to reaching the medium-term goal of raising infrastructure spending to 7 percent of gross domestic product (GDP).
She also pointed out that even if the government earmarked an increase in spending to 5.1 percent of GDP this year, realization of the plan would depend on actual revenue collections.
“Even with the improvement in spending, structural issues still remain that will make it challenging to reach the 5.1 percent of GDP plan for infrastructure in 2018,” she said.
Diokno, meanwhile, also claimed that recently released full-year government spending data showed a continued decline in underspending — at 2.4 percent — if interest payments were excluded from the computation.
“The lower underspending rate is a result of what we started last year which is to shorten the validity of appropriations to one year. Because of this, agencies are compelled to expedite the implementation of their projects and programs. They were also required to include only projects that are shovel-ready,” he said.
Underspending, which hit as high as 13.3 percent in 2014 and 12.8 percent in 2015, dropped to 3.6 percent in 2016 when the Duterte administration took over, Diokno added.
The drop was attributed to reforms aimed at accelerating budget utilization by agencies and Diokno said the department was targeting to eliminate underspending in the coming years.
“Moving forward, we expect further improvement in government spending as the bureaucracy shifts to annual cash-based budgeting starting FY (fiscal year) 2019,” he said.
For this year, P2.97 trillion or 78.8 percent of the P3.78-trillion national budget was already released in January, Diokno said.