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Philippines: Last-minute boost seen as infrastructure spending falls to lockdown levels
MANILA, Philippines — The Duterte administration’s infrastructure spending fell back to lockdown levels in November, but a catch-up likely materialized in the last month of the year, a rebound that would be difficult to sustain in 2021.
Direct spending on infrastructure by the national government amounted to P44.3 billion that month, down 25.4% year-on-year, latest budget department data showed. Month-on-month, spending contracted 15.4%.
Cash spent on big-ticket items in November was the lowest since the P41 billion disbursed in May when restrictive lockdowns in the archipelago disrupted project blueprints and schedules. That remains to be the main reason for lackluster spending even 5 months since prohibitions were slowly eased in June.
But agencies were long expected to have adjusted to remaining movement controls, which are not likely to go away for the time being. This year, Nicholas Antonio Mapa, senior economist at ING Bank in Manila, said infrastructure building would be sluggish, which in turn would potentially block recovery.
“What is more alarming is the month on month decline for November and we hope there is a reversal at least for December with the economy in dire need of some boost,” he said in an email.
“Going into 2021, we expect government’s stance on spending to remain modest with authorities espousing fiscal prudence despite the recession and a clear slowdown in economic momentum,” Mapa said.
But at least before that happens, Cid Terosa, senior economist at University of Asia and the Pacific School of Economics, said December 2020 would have secured a last-minute boost from infrastructure agencies. Spending, he said, would have accelerated that month “because of the closing of books” of agencies for the fiscal year.
“The final month of 2020 will see greater capital outlays simply because of the closing of books. Fast tracking projects and addressing payables will boost spending,” Terosa said in a text message.
Last-minute boost?
Data support Terosa’s assessment. Emerging figures from Bureau of the Treasury, released by Finance Secretary Carlos Dominguez III earlier, showed that total state spending picked up to P4.21 trillion for all of 2020, falling only a tad below the government’s P4.23-trillion revised forecast.
A pick-up of this scale would be crucial to putting the economy back on growth path after shedding 10% of its value in the first 3 quarters of the year, running above official projections of up to 9.5% contraction in 2020.
Beyond the national government, capital outlays by cities and provinces, as well as that of state corporations, gained pace in November. The former reached P14.3 billion, up 11.9% year-on-year. The latter, coming from zero same period last year, amounted to P10.1 billion.
But indeed delays caused by the coronavirus on projects were obvious. From January to November last year, capital outlays hit P727.9 billion, down 14% year-on-year. By segments, those spent directly by the national government for this purpose slumped a larger 22% on-year to P548.8 billion.
“In 2021, however, growth in capital outlays will be the order of the day as the economy seeks to trek along a stable and resilient growth path,” Terosa said.
Source: https://www.philstar.com/business/2021/01/19/2071546/last-minute-boost-seen-infrastructure-spending-falls-lockdown-levels