Philippines to increase infra spending to ward off effects of US turmoil

The Philippines is accelerating spending on infrastructure to ward off the ill effects of the US credit downgrade and other outside shocks, according to Socioeconomic Planning Secretary Cayetano W. Paderanga Jr.

Paderanga talked about the strategy in Cebu, where the National Economic and Development Authority (NEDA) launched a caravan promoting the Philippine Development Plan. Paderanga concurrently serves as director general of NEDA.

Infrastructure spending is seen to encourage long-term investments and generate jobs. These, in turn, will help ward off the negative medium-term effects of the US credit downgrade.

Paderanga said that the adverse effects of shocks such as the US credit downgrade will be felt in financial markets for some time, but they correct themselves eventually.

“On the investment side, it’s really that you want to show investors which way or how the infrastructure support will look. There are key investments that have to be made, and that may take some time to finish,” Paderanga said.

Paderanga said that according to Budget Secretary Florencio B. Abad, the Department of Public Works and Highways had increased the pace of project implementation. Paderanga also cited as an example the transportation and communications network in the country as one area where infrastructure spending would be pumped in.

He said key ports need to be improved but the transportation and communications network must be reviewed systematically before spending because government needs to make public spending “count.”

“This we need for BPO [business process outsourcing], for tourism, as well as for agro-industrial processing,” Paderanga said.

Paderanga said infrastructure plans have not reached the “more industrial” side but “that will become clearer when the processes have in a way been cleaned up.”

Such infrastructure will help bring down the cost of doing business, Paderanga said.

The country’s economic managers told senators at a budget hearing this week that only P698.9 billion, or 40.8 percent, of the P1.7-trillion budget for the year has been spent so far.

Senators urged the government to realign funds toward infrastructure projects, especially those that will generate jobs and pump-prime economic activity in the countryside. There was also a suggestion that the government spend on its infrastructure projects first before pushing for public-private partnerships.