H1 infra spending down despite surge in June

Government spending on infrastructure declined by 4.3 percent year-on-year to P297.9 billion in the first half amid the COVID-19 lockdown even as expenditures rose in June when three-fourths of the economy reopened under a less restrictive quarantine.

Latest data from the Department of Budget and Management (DBM) showed that disbursements for public infrastructure and other capital outlays from January to June was lower than the P311.4 billion spent a year ago.

Actual end-june infrastructure spending nonetheless exceeded the downscaled P279.4-billion program for the first six months.

“Infrastructure and other capital outlays exceeded the program by P18.5 billion, or 6.6 percent, with the gradual easing of restrictions in Luzon in June, and continued construction works in areas least affected by the imposition of community quarantines such as the Visayas and Mindanao regions. It may be noted, however, that the infrastructure program for the period was lower than estimates prior to the COVID-19 pandemic. This is due to the temporary stoppage and delays in construction activities given the quarantine and the minimum health protocols implemented in various communities,” the DBM said in a report on Friday.

While the government spent P1.05 trillion on infrastructure last year, the Cabinet-level Development Budget Coordination Committee in July approved a lower 2020 program of P785.5 billion since a portion of the implementing agencies’ budgets were realigned for COVID-19 response.

In the second quarter—at the height of the longest and most stringent COVID-19 lockdown in the region—expenditures on public infrastructure amounted to P141.9 billion, up from P133.2 billion last year but lower than the P156.1 billion disbursed in the first quarter.

The DBM attributed the yearon-year increase in infrastructure spending from April to June to “the base effects of the reenacted budget last year when implementation of new programs/ projects have been delayed.”

“However, infrastructure expenditures in general were muted during the imposition of community quarantines as various construction activities were temporarily halted, and/ or scaled down in areas least affected by COVID-19 to help contain the further spread of the virus,” the DBM said.

In June alone, government spending on infrastructure and other capital outlays jumped to P62.8 billion from P43.5 billion a year ago and P38.9 billion in the previous month.

The DBM earlier said “spending was propelled by various nationwide projects of the Department of Public Works and Highways (DPWH) such as construction, preventive maintenance, upgrading, widening, repair and rehabilitation of roads (such as national, secondary, access, bypass and diversion), bridges and flood control structures.”

This, it said, was also due to the capital outlay projects under the revised Armed Forces of the Philippines modernization program of the Department of National Defense and payment of claims from various Department of Education suppliers and contractors during the month.

The DBM is bullish that with the continued implementation of infrastructure activities of the DPWH, the Department of Transportation and other agencies, the operating expenditures of various government agencies and the salaries of state workers, overall public spending will contribute to a faster recovery of the economy.