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Q1 2022 public infra spending up despite election ban

MANILA, Philippines—Total public infrastructure spending in the first quarter of 2022 inched up 4 percent year-on-year to P252.8 billion despite the ban on new projects ahead of the May 9 presidential elections, which slowed down rollout of the national government’s infra projects.

The latest Department of Budget and Management (DBM) data on Tuesday (May 24) showed that infrastructure disbursements — which included infrastructure components of equity and subsidies injected into state-run corporations plus transfers to local governments — from January to March rose from P243 billion during the first three months of last year.

However, the national government’s expenditures on infrastructure and other capital outlays declined by 2.6 percent to P190.2 billion as of end-March from P195.2 billion in 2021.

In a report, the DBM blamed the lower year-on-year spending of the national government on infrastructure mainly to “the timing of payables for regular infrastructure programs.”

“Disbursements are expected to slow down in April and May following the 45-day election ban on certain public expenditures pursuant to the Omnibus Election Code in connection with the conduct of the 2022 national and local elections. Spending is seen to normalize towards the end of May once the ban ends,” the DBM said.

But last March alone, the national government’s infrastructure and other capital outlays grew 14.2 percent year-on-year and 81.4 percent month-on-month to P100.2 billion.

The DBM attributed the higher March disbursement mainly to “payment for completed and partially completed infrastructure projects of the Department of Public Works and Highways (DPWH) nationwide, the revised Armed Forces of the Philippines (AFP) modernization program of the Department of National Defense (DND), and the basic education facilities and payment for deliveries of learning tools and equipment of the Department of Education (DepEd).”

For 2022, the government plans to spend a bigger P1.27 trillion, equivalent to 5.9 percent of gross domestic product (GDP), on infrastructure. In 2021, total public infrastructure spending reached a historic-high P1.12 trillion, or 5.8 percent of GDP.

President Rodrigo Duterte’s economic team wants likely successor Ferdinand “Bongbong” Marcos Jr. to prioritize infrastructure development, to be partly funded by another round of comprehensive tax reform, under the proposed fiscal consolidation and resource mobilization plan.

This fiscal consolidation pitch may include new or higher taxes, prioritizing infrastructure spending while slashing budgets on non-priority sectors, as well as drivers to growth so the economy can increase government revenues and outgrow ballooning public debts as well as debt servicing requirements.

In a May 16 report, regional corporate investor advisory firm Dezan Shira and Associates said it would help that “investors should feel mildly optimistic if Marcos Jr.’s plans are to continue with infrastructure spending under “Build, Build, Build,” referring to the Duterte administration’s ambitious infrastructure development program.

“Marcos Jr. did, in one interview in late 2021, state that he wanted to continue with President Duterte’s ‘Build, Build, Build’ infrastructure program, and channel part of the internal revenue allocation to strengthen local micro, small, and medium-sized enterprises (MSMEs),” noted Dezan Shira and Associates, a company assisting foreign investors in Asia.

The Economic Development Cluster (EDC), chaired by Finance Secretary Carlos Dominguez III, said in a recent report that Duterte will leave behind 40 completed flagship infrastructure projects worth P365.2 billion, which formed part of the Build, Build, Build pipeline, by yearend.

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The article was originally published in Inquirer.NET and written by Ben O. de Vera.