• Infra, capital spending surges 31.4% in May

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    Expenditure to be even higher in H2 – DBM

    Infrastructure and other capital spending rose sharply in May mainly on priority public works projects and the modernization of the armed forces, the Department of Budget and Management (DBM) said on Thursday.

    Analysts saw the surge in spending as an indication of the Duterte government’s political will to push ahead with the infrastructure spending it promised early on.

    Infrastructure and capital spending in May rose 31.4 percent to P46.2 billion from P35.2 billion a year earlier, DBM data showed.

    In the first five months of the year, such expenditure grew 8.1 percent to P197.2 billion from P182.4 billion in the corresponding period last year, the agency said.

    In its assessment, the Budget department traced the sharp rise in infrastructure spending this May to “the completed road construction, repair and rehabilitation, and flood control infrastructure implemented by the Department of Public of Works and Highways, as well as the requirements for the purchase of anti-submarine helicopters under the AFP [Armed Forces of the Philippines] Modernization Program of the DND [Department of National Defense].”

    Political will

    Metropolitan Bank & Trust Co. Research head Marc Bautista said the capital expenditure performance in May was a sign of political will on the part of the government to push through with its infrastructure spending plans.

    “The traditional summer months are when road works are best rolled out and finished, and so this kind of spending is thus, expected. The fact that the May number is higher than last year’s bodes well for the government’s infrastructure spending plans,” he said.

    Bautista warned, however, it might be a big challenge for the government to keep up with such pace of spending during the rest of the year.

    “For now, the fact that the year-to-date spending on infrastructure and capital outlays exceeds that of last year should provide markets some degree of comfort regarding the ability of the government to push through with its spending plans,” he added.

    Even stronger spending seen in H2

    In the coming months, the government’s capital spending program leans toward the third and fourth quarters of the year, mainly on account of the payments for completed infrastructure projects implemented during the summer season, the DBM said.

    “Moreover, the capital outlay projects under the DND-AFP Modernization Program and the DILG-PNP [Department of Interior and Local Government-Philippine National Police] Capability Enhancement are programmed for the second semester since approval and procurement were ongoing in the earlier part of the year,” it explained.

    The incumbent government targets to spend P847 billion this year on infrastructure development covering projects in all regions, including small-, medium- and large-scale ventures to meet infrastructure spending-to-gross domestic product (GDP) ratio of 5.3 percent.

    Under the Build, Build, Build component of the government economic reform program dubbed Dutertenomics, the administration intends to spend P8.4 trillion on infrastructure in the six years to 2022.

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