Infrastructure spending picks up amid concerns

STATE infrastructure and other capital outlays surged in May, according to the Department of Budget and Management (DBM) whose head yesterday said efforts to unclog spending bottlenecks have begun to pay off.

Yesterday also saw some economic managers selling the administration’s “hybrid” infrastructure financing scheme — involving official development assistance (ODA) and government funding for the construction phase and reserving public-private partnerships (PPP) for operation and maintenance — to an audience of foreign and Filipino businessmen at the “Re-Thinking Infrastructure Building” forum in Makati City.

The administration of former president Benigno S. C. Aquino III had focused on PPP and has been cited by multilateral agencies like the Asian Development Bank as a model for other developing economies struggling to bridge their own infrastructure gap. But the current government of President Rodrigo R. Duterte has argued that it typically took about thee years under that framework for projects to move from conceptualization to construction.

Infrastructure and other capital outlays totaled some P46.2 billion in May, 38.1% from April’s P33.5 billion and 31.4% from May 2016’s P35.2 billion.

That took year-to-date outlays to P197.2 billion, about 8.1% more than the year-ago P182.4 billion, compared to a mere 2.6% increment in the four months to April.

In its monthly assessment of government disbursements, DBM said attributed the spike to “the completed road construction, repair and rehabilitation, and flood-control infrastructure implemented by the DPWH (Department of Public Works and Highways), as well as the requirements for the purchase of antisubmarine helicopters under the AFP (Armed Forces of the Philippines) Modernization Program.”

The government plans to spend about P847.22 billion this year on infrastructure alone, equivalent to 5.32% of gross domestic product (GDP), as part of its “Build, Build, Build” program to disburse a total of P8.44 trillion for this purpose from 2017 to 2022, when the current administration ends its term. In 2022, spending on infrastructure alone should hit P1.899 trillion, equivalent to 7.45% of GDP.

‘I TOLD YOU…’

Budget Secretary Benjamin E. Diokno said his close watch on line departments and state agencies has begun to yield results.

“I told you, kasi lagi ko sila kinukulit ( because I have been pestering them). I monitor their performance every month and I talk to them constantly,” Mr. Diokno said on the sidelines of the forum yesterday in Makati City.

“It will pick up. Construction is like an S-curve. It starts slow then towards the end, it will go fast… the second half will be much better than the first half.”

Asked whether the year’s P847.22-billion infrastructure spending program was doable, Mr. Diokno replied: “We will shoot for at least 90% — that’s already high enough.

DBM’s own report said “[d]isbursements are expected to gradually gather speed in the succeeding months.”

“Seasonally, spending usually picks up during the third month of the quarter as line agencies speed up the utilization of their NCAs (notice of cash allocations) before they lapse at the last working day of the quarter…,” the department explained.

“Agencies are expected to implement catch-up plans or measures to recover from the delays encountered in the earlier months, and these could further improve their disbursement levels.”

BETTER THIS SEMESTER

In his own briefing in Malacañan Palace yesterday, Finance Secretary Carlos G. Dominguez III downplayed persistently slow pickup of government spending up to February, saying that major infrastructure projects approved by the National Economic and Development Authority (NEDA) Board since Mr. Duterte took office at end-June last year should spur disbursements this semester.

“It (disbursements) will pick up in the second half,” Mr. Dominguez said, beginning his briefing by declaring: “I am happy to report to you today that the nation is fiscally secure.”

“There will be a lot more construction in place,” he assured.

Mr. Dominguez admitted that bulding spending momentum from the previous administration is “taking… time”.

“You know, the government is like a train: before the train gets up to speed, you have to go a little bit of a way first and this administration has tried to keep up the momentum of the past administration,” the finance chief said.

“You know in the past administration, they stopped all the projects for the first two years [to ensure systems are more transparent]… Here we did not; we approved everything. So we are continuing moving ahead,” he added.

“We did not inherit a large backlog of projects. We have to build up our own projects… So these projects take time to get ahead, they’re very large. You need project studies and all of that, but they are going to be done.”

According to Mr. Dominguez, among the projects that will break ground this year is the P12.55- billion Clark International Airport Expansion Project that was approved by the NEDA Board on Wednesday last week together with other projects cumulatively worth some P304.45 billion.

Analysts of Moody’s Investors Service and First Metro Investments Corp. on July 5 separately said they have tempered their own projections for Philippine GDP growth this year to 6.5%, matching the low end of the government’s 6.5-7.5% target and slowing from 2016’s 6.9%.

Yesterday’s forum saw Socioeconomic Planning Secretary Ernesto M. Pernia assure that the private sector will continue play a key role in the government’s infrastructure development program. “Our local construction industry has the most to gain, regardless of funding source. Of course, the government expects that participating private contractors are well-qualified based on standards set under government procurement, ODA sources and PPP financiers,” Mr. Pernia said in his presentation, adding that he expects the NEDA Board to approve 18 more major projects this year on top of the 18 that have bagged such final green light under this administration.

Italian Chamber of Commerce in the Philippines Executive Director Lorens Ziller, who gave the forum’s opening remarks, said in an interview afterwards: “Definitely we see that there is a lot of interest, a lot of technology needed, which involves foreign contractors.”

“Local players don’t have the expertise like those of the Italians, Germans, Japanese or the Koreans,” Mr. Ziller noted.

“So, definitely these projects would go faster and efficiently, especially with foreign contractors.”