Improve infrastructure spending

By means of Beatriz Marie D. Cruz, Reporter

The NATIONAL Government’s (NG) spending on infrastructure rose 17% in June as it increased spending on completed public works, the Department of Budget and Management (DBM) said.

In its latest report, the DBM said infrastructure and other capital expenditures rose 17% to P139.7 billion in June from P119.4 billion in the same month a year ago.

Month-on-month, infrastructure spending rose 2.45% from P136.4 billion in May.

The increase in infrastructure spending in June was attributed to “disbursements by the DPWH (Department of Public Works and Highways) for completed road, bridge and multi-use construction projects, previous years of right-of-way claims and progress invoices for other projects. road infrastructure projects financed under the non-programmed appropriations,” the DBM said.

The NG also spent money on capital projects under the Department of National Defense’s Revised Armed Forces of the Philippines Modernization Program.

In June, infrastructure spending included locally financed projects under the PAyapa at MAsaganang PamayaNAn (PAMANA) program of the Office of the Presidential Adviser on the Peace, Reconciliation and Unity, such as road networks, Fincluding flood management and water supply systems.

The government has also spent money on the construction, repair and rehabilitation of courtrooms across the country.

Ruben Carlo O. Asuncion, chief economist at Union Bank of the Philippines, Inc., said the increase in infrastructure spending in June was demonstrable.Fcontributed to faster economic growth in the second quarter.

“The government pushed spending and supported domestic demand weakness in the second quarter amid the impact of El Niño and higher interest rates,” he said in a Viber message.

Preliminary data from the Philippine Statistics Authority (PSA) shows that gross domestic product (GDP) grew at an annualized rate of 6.3% from April to June, faster than the revised 5.8% growth in the first quarter and 4.3% in the second quarter. quarter of 2023.

PSA data also showed government spending rose 10.7% in the second quarter, a reversal of the 7.1% contraction a year earlier.

“The preparations for the midterm elections may also have increased the urgency to expedite the rollout and completion of more infrastructure projects before the election ban in early 2025, and to demonstrate more achievements/results that can be felt by the electorate,” says Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Facebook Messenger chat.

FIRST HALF
Infrastructure for the first half and other capital expenditures rose 20.6% to P611.8 billion from P507.2 billion a year ago.

This exceeded the P545.3 billion program for the period by 12.2% “reflecting the efforts of the DPWH to accelerate the completion of its ongoing projects and expedite the processing of payment claims, both from last year’s obligations as of the this year’s budget,” the DBM said.

The DBM also said direct payments have been made for foreign-backed road and rail transport projects under the Public Works and Transport departments in the region. Ffirst half.

“As early as January, we provided them (implementing agencies) with all their allocations and most of the DPWH projects had already been advanced tendered… By January, they had already implemented most of the projects,” Budget Secretary Amenah F. Pangandaman told a brie.Fon Wednesday.

Total infrastructure expenditure, which also took into account the infrastructure components of transfers to local government units (LGUs), and subsidies and equity to government-owned and controlled enterprises, rose 18.4% from P608 at the end of June to P720.5 billion as of the end of June. Last year 0.6 billion.

This exceeded the government program of P671.3 billion for the period by 7.33%, data showed. It also corresponded to 5.7% of gross domestic product (GDP).

“Infrastructure spending and MOOE (maintenance and other operating costs) will continue to drive spending for the remaining months of the year, with 56.1% and almost 52% respectively of their full annual program expected this second half,” the DBM said. .

For infrastructure spending, the DBM says this includes payments for ongoing construction work.

“The said expenditure will hopefully help support strong economic growth by creating demand in the construction sector or supporting other related service sectors, while also facilitating the recovery of the agricultural sector,” the ministry said.

Terry L. Ridon, public investment analyst and chairman of think tank InfraWatch PH, said he expects infrastructure spending to rise further this year.

“Infrastructure agencies should do their best to improve their absorption capacities for this year’s projects, especially since 2025 is an election year where the law requires a suspension of project implementation for a specific case.FIC period,” he said in a Viber chat.

Mr. Asuncion said the government should focus spending on infrastructure, flooding and power generation projects.

“The challenge is that it takes time to set up new projects,” he says.

The government aims to spend 5-6% of GDP on infrastructure annually until 2028.