Economy picks up momentum on election fever, infra spending

Economic growth likely picked up in the first quarter as the government spent more on infrastructure, the Department of Budget and Management (DBM) said Thursday.

“We should have a good first quarter growth bolstered by the high obligation rate of the Department of Public Works and Highways (DPWH) and by election spending,” Budget Secretary Florencio B. Abad said in a statement.

DBM data showed the DPWH already used up P211 billion or over two-fifths of its P479-billion allotment under the 2016 national budget, up from the 32-percent obligation rate posted a year ago. The agency has also used up 98 percent of its first quarter cash allocation, equivalent to P55 billion in disbursements.

“We laud DPWH’s successful efforts to ensure the continuity of their projects before the election ban took effect. These promising figures for obligations and notices of cash allocation utilization rates suggested that public construction would continue to drive growth upwards in the first quarter of 2016 as it did last year,” Abad said.

“I also wanted to emphasize that the P205 billion—or 65 percent of the total allotment—was obligated for regional projects before the start of the election ban. This meant that DPWH would continue to improve local infrastructure uninterrupted throughout the year,” the Budget chief added.

Socioeconomic Planning Secretary Emmanuel F. Esguerra earlier said economic expansion during the January to March period “certainly” had been better than the 5-percent growth posted in the first quarter of last year on the back of election-related spending and the government’s move to roll out infrastructure projects ahead of the national polls.

The government had programmed to spend on infrastructure outlays an amount equivalent to 5 percent of the gross domestic product (GDP) this year.

Latest DBM data showed that as of the third quarter of last year, infrastructure expenditures accounted for only 2.55 percent of GDP, below the 4-percent target.

In 2014, infrastructure spending to GDP ratio was at 2.74 percent, also lower than the programmed 3.5 percent.

It was only in 2013 when the government exceeded its infrastructure spending target of 2.5 percent of GDP, having hit 2.66 percent that year.

“In order to meet the medium-term infrastructure spending targets, the government has to address  implementation bottlenecks,” the DBM said in a recent memorandum. These include right-of-way and social acceptability issues.