July infrastructure spending rises

2 Mins read

GOVERNMENT spending on infrastructure jumped in July amid looser quarantine restrictions. — PHILIPPINE STAR/ MICHAEL VARCAS

STATE INFRASTRUCTURE spending jumped by 39% in July as the government ramped up construction works despite the onset of the rainy season, data from the Budget department showed.

Preliminary data from the Department of Budget and Management (DBM) released on Tuesday showed infrastructure and other capital outlays increased to P72.8 billion in July from P52.3 billion a year ago. However, the July figure was 23% down from the P94.4 billion spent in June.

The DBM attributed the higher infrastructure spending to the projects implemented by the Department of Public Works and Highways (DPWH). These projects include construction and repairs of roads and bridges, flood mitigation structures, drainage systems, buildings, as well as payment for right-of-way access.

Disbursements under the modernization program of the Armed Forces of the Philippines and the payments for the digital equipment and supplies acquired by the Philippine National Police also supported higher infrastructure spending in July, the DBM said.

“The July slowdown may have been related to the weather, when most infrastructure projects slow down because of the rainy season, and a timelier reason can be due to the lockdowns,” UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said via Viber on Tuesday.

In the seven months to July, DBM reported infrastructure spending surged by 42.6% to P499.4 billion from P350.3 billion a year ago, due to sustained implementation of infrastructure projects and capital outlay projects of other state agencies.

State spending on infrastructure could further increase for the rest of the year according to the Budget department as the government continues to settle payments for its ongoing infrastructure projects.

Base effects may have also propped up infrastructure spending in July given that quarantine restrictions are more relaxed and allowed more construction activity, University of Asia and the Pacific Senior Economist Cid L. Terosa said in an e-mailed response.

“Growth, however, was slower than June 2021 mainly because of administrative issues related to disbursements,” he said.

For the rest of the year, Mr. Asuncion said infrastructure spending should pick up further, especially when rainy season ends.

“Remember that a ban on infrastructure projects is looming on the horizon as part of the election,” he said.

Mr. Terosa said he expects the government to intensify further its investments on infrastructure, especially as a bigger portion of the population is vaccinated and the economy recovers.

Colegio de San Juan de Letran Graduate School Dean Emmanuel J. Lopez said the infrastructure projects are being fast-tracked to stimulate the economy and create much-needed jobs.

“Implicitly it can be implied that increased spending, creates political leverage to the administration which is a natural advantage to a sitting politician,” he said via e-mail.

For this year, the government set a P1.02-trillion infrastructure budget, which is equivalent to 5.1% of GDP.

The Development Budget Coordination Committee raised the infrastructure program to P1.29 trillion, equivalent to 5.8% of GDP, for 2022. — Beatrice M. Laforga

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