Infrastructure spending jumps 45% in 4 months

Public infrastructure spending surged in the first four months of the year in what seemed to be the government’s response to criticisms that anemic budget for capital outlays has dragged the Philippines’ ability to corner foreign direct investments (FDIs).

The Department of Budget and Management (DBM) reported that from January to April, infrastructure spending of the national government hit P75.2 billion, rising nearly 45 percent from P52 billion in the same period last year.

The latest amount mainly covered road projects of the Department of Public Works and Highways (DPWH) and partly the construction of irrigation systems, classrooms and other educational facilities, and hospitals and health centers, the DBM said.

The government agency said the higher public spending was made possible not only by higher revenue collection but also by budget reforms, under which development items like infrastructure were given priority.

“Through our budget reforms and, consequently, the improved quality of public spending, we were able to fill out crucial resource-and-supply gaps that may have affected the country’s fast-growing industries,” Budget Secretary Florencio Abad said in a statement.

The Philippines lags behind its neighbors in terms of public infrastructure spending, which last year was estimated at less than 3 percent of the country’s gross domestic product (GDP). The average government spending on infrastructure in Southeast Asia stands at 5 percent.

According to the World Bank and the Asian Development Bank, the Philippines has to significantly increase its public infrastructure spending if it wanted to catch up with its neighbors in terms of FDIs.

Last year, the Philippines got only $2 billion in FDIs while neighboring countries got much more than that amount. Indonesia, for instance, registered $23 billion in FDIs last year.

The World Bank suggested that the Philippines increase its public infrastructure spending gradually up to 5 percent of GDP by 2016.

The ADB said the country needed to target infrastructure spending equivalent to 7 or 8 percent of GDP in order to compete head-on with its neighbors in cornering FDIs.

Philippine economic managers have claimed that the country was up to the challenge and that the Aquino administration was committed to at least hitting the Southeast Asian average for public infrastructure spending by the end of its term in 2016.