Philippines: Government infrastructure spending hits nearly P200 billion in 3 months

MANILA, Philippines —  The government increased its infrastructure spending to almost P200 billion in the first quarter, mainly to finance road and rail projects, the Department of Budget and Management (DBM) said.

Based on the latest national government disbursement performance report of the DBM, state infrastructure expenditure and other capital outlays inched up by 7.3 percent to P196.7 billion in January to March, from P183.2 billion in the same period last year.

The DBM said this was due to the implementation of road infrastructure projects of the Department of Public Works and Highways and rail transport foreign-assisted projects of the Department of Transportation.

However, outturns were lower by 5.7 percent or P14.7 billion compared to the mandated program for the quarter.

This is due to the outstanding checks of the DPWH and lower subsidy releases pending requests from government-owned and controlled corporations that are implementing infrastructure programs.

Meanwhile, overall government spending for the quarter reached P1.09 trillion, down by 1.1 percent from the P1.1 trillion a year ago.

Apart from infrastructure, the government only recorded higher maintenance and other operating expenses to P194.9 billion due to assistance and subsidies for agriculture, social services, education and health sectors.

Personnel services expenditures also barely moved at P298.8 billion, inching up by just 1.1 percent.

Other expense items all went down, which dampened the growth of infrastructure and maintenance expenditures.

Broken down, combined allotment and capital transfers to local government units (LGUs) fell by 14 percent to P230.8 billion on lower tax allotments due to the so-called Mandanas ruling.

The tax revenue base, from which the tax allotment shares of LGUs this year is determined, was the actual tax collections in 2020 – the height of the pandemic.

Interest payments also decreased by five percent to P142 billion due to lower payments for fixed rate treasury and benchmark bonds.

A decline in government spending was similarly noted in subsidy support to government corporations which went down to P21.3 billion with the ongoing submission of special budget requests and supporting documents by the concerned government corporations.

Tax expenditures also went down to P4.3 billion due to lower recorded documentary stamp taxes on government securities.

As of end-March, the remaining program balance amounts to P954.4 billion or almost 20 percent of the record P5.268 trillion 2023 budget.

Big-ticket releases are already expected in the coming months for various projects on transport, health, and education, among others.

“These expenditures may further drive disbursements in the second quarter, on top of the allotments which were already comprehensively released at the start of the year,” DBM said.

“Line departments, particularly those in the infrastructure sector, are also expected to take advantage of the relatively favorable weather conditions from April to early June to accelerate program implementation and construction activities,” it said.

The government has set a spending target equivalent to 21.3 percent of gross domestic product this year, while overall infrastructure disbursements will be equivalent to 5.3 percent of GDP.