Zero underspending in 2018 seen

As the Duterte administration ramped up construction of infrastructure projects under its ambitious “Build, Build, Build” program, economic growth is expected to hit the lower end of the government target this year, Budget Secretary Benjamin Diokno said on Wednesday.

In a press conference, Diokno said the share of infrastructure spending to the gross domestic product (GDP) increased to 6.3 percent in 2017 and was expected to have hit 6.2 percent last year, nearly triple the 2-percent average between 1986 and 2016.

The programmed infrastructure spending-to-GDP ratio for 2018 was 6.3 percent.

“Compared to the initial two years of every president when he or she was still learning the ropes of the presidency, President Duterte has shown a much better job than his peers. This fast-tracked spending performance addresses the country’s underinvestment in infrastructure, which has severely dragged the Philippines’ economic performances in the past,” Diokno said.

The budget chief said the Duterte administration’s performance in rolling out infrastructure so far was “better than any post-Marcos administration.”

He said 44 of the 75 flagship infrastructure projects under Build, Build, Build had already started implementation.

Diokno noted that at end-November 2018, the national government’s total expenditures amounted to P3.1 trillion, up by almost a fourth from P2.5 trillion during the first 11 months of 2017.

Since the government had to spend a total of P3.37 trillion for the entire 2018, Diokno said the end-November figures “[increased] the likelihood of zero underspending for 2018.”

For 2019, the government had programmed the infrastructure spending-to-GDP ratio to further rise to 6.8 percent, and Diokno was optimistic they would achieve this target even as the government was operating on a reenacted budget at the start of the year.

The Duterte administration plans to further raise the infrastructure spending-to-GDP ratio to 7 percent by 2022, at par with the country’s Asean peers.

“Past neglect may no longer be corrected, but through Build, Build, Build and this renewed interest in infrastructure, things are definitely looking up as the Philippines continues to surge as the fastest-growing economy in the fastest-growing region in the world,” Diokno said.

The budget chief said he expected the economy to grow by 7 percent this year, within the government’s 7-8 percent GDP growth target.

As for inflation, Diokno said declining global crude prices would bring the rate of increase in prices of basic commodities “closer to 2 percent.”

The government expects headline inflation to return within the 2-4 percent target range this year after hitting a 10-year high of 5.2 percent in 2018.