Philippines: Budget chief expects infrastructure spending to have closed in on target

  • The Budget chief expects infrastructure spending in 2018 to have closed in on the government’s program.
  • Budget Secretary Benjamin E. Diokno said that the share of infrastructure spending to gross domestic product (GDP) likely settled at 6.2% in 2018, based on funds from Jan 18 to Nov 18, against an official 6.3% full-year program for 2018.
  • “This is in line with the Duterte administration’s target of increasing infrastructure spending to more than 7% of GDP by 2022,” Mr. Diokno said.
  • The infrastructure spending-to-GDP ratio based on obligated funds and not actual payments is targeted to hit 7.3% by 2022, when President Rodrigo R. Duterte ends his six-year term, from this year’s 6.3% target.
  • The government is shifting to a cash-based spending scheme starting with the proposed 2019 national budget that accounts for only actual payments to contractors in a fiscal year plus a six-month extension. Under this scheme, infrastructure spending-to-GDP is programmed at 4.7% in 2019, rising to 7% by 2022.
  • Expecting the 2019 budget to be operational before the end of 1Q19, Mr. Diokno said that the government is preparing a catch-up plan to mitigate the impact of the delays in implementing new projects as well as the 45-day halt of public works before the 13 May 19 mid-term legislative and local elections.
  • “This fast-tracked spending performance addresses the country’s under-investment in infrastructure, which has severely dragged the Philippines’ economic performance in the past.”
  • Mr. Diokno also said that he expects economic growth to hit “at least 7%” in 2019 amid waning inflation.
  • Inflation’s spike for much of 2018 had been blamed for crimped GDP growth, since elevated overall price increases of widely used goods weighed on household consumption.
  • Latest data on infrastructure spending and other capital outlays show such spending settled at PSP665.1bn as of Oct 18, growing 50.3% from the same period in 2017.

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