Infrastructure spending still short year-to-date despite September surge

By Beatrice M. Laforga

INFRASTRUCTURE SPENDING surged in September by its fastest pace in almost three years, but still fell short of program year-to-date due to late 2019 national budget enactment, according to data which the Department of Budget and Management (DBM) released on Thursday.

State spending on infrastructure and other capital outlays surged by 53.9% to P100.3 billion in September from the P65.2 billion recorded a year ago.

That was the biggest increment since October 2016’s 56.4% year-on-year increase to P43.7 billion.

“The growth of government disbursements this September was mainly driven by an upsurge in disbursements… particularly in infrastructure/other capital outlays spending, indicating that the government has broken through the effects of the delayed passage of the FY 2019 national budget and the election ban on infrastructure spending which weighed… on economic growth during the first half of the fiscal year,” DBM said in a statement.

Despite last month’s pick up, the P546.3-billion year-to date infrastructure expenditures were still 4.3% smaller than the P570.8 billion spent in last year comparable 10-month period.

January-September infrastructure spending also fell 8.1% short of the P594.5-billion program for the period “mainly on account of the delay in the passage of the FY 2019 GAA (general appropriations act) and election ban on public works at the earlier part of the year,” DBM said.

DBM attributed the double-digit hike in September infrastruture spending to the Department of Public Works and Highways’ completion of construction, upgrading, repair and rehabilitation of roads, bridges and flood-control structure.

“Likewise, capital expenditures related to the purchase of military equipment under the Revised AFP Modernization Program of the DND (Department of National Defense), and the construction of the new Supreme Court building of the Judiciary ramped up infrastructure spending for the month,” it added.

Sought for comment, ING Bank NV Manila Branch Senior Economist Nicholas Antonio T. Mapa said: “Given that public construction is a mere three percent of total GDP, overall 3Q GDP will also hinge on other sectors such as durable goods investment (14% of GDP) and household spending (64% of total).”

The government will report third-quarter gross domestic product (GDP) data on Nov. 7.

For Security Bank Corp. Chief Economist Robert Dan J. Roces, the “late surge” in infrastructure spending may drag third-quarter GDP growth “a bit” but sustained spending through fourth quarter will “validate the positive effects of the catch-up plan and will drive growth above six percent for the last three months of the year”.

Bank of the Philippine Islands Lead Economist Emilio S. Neri, Jr. said “[t]he surge in outlays means more liquidity was released in the financial system after a sizeable portion of frontloaded borrowings of the PHL government was just parked idly with the Bangko Sentral for nearly eight months.”

“The DBM is optimistic that the national government will be able to meet its catch-up spending program before the end of the fiscal year in support of the administration’s growth targets,” DBM said in its statement.