DBM: Infra spending up 41% in 2018 as cash-based budgeting takes root

Infrastructure spending jumped by over two-fifths to P803.6 billion in 2018 as the national government laid the groundwork for cash-based appropriations, the Department of Budget and Management (DBM) said.

In a report Wednesday, the DBM said government spending on infrastructure and other capital outlays last year climbed 41.3 percent from P568.8 billion in 2017.

The amount spent to build infrastructure in 2018 also exceeded by 3.6 percent the P775.4-billion programmed for the year.

“Implementation of various infrastructure projects gained speed amid the shift to one-year validity of appropriations and the cleaning of prior years’ accounts payables in transition to the cash-based budget this 2019,” the DBM report read.

A cash-based budget limits incurred contractual obligations and disbursement of payments to goods delivered and services rendered and inspected within the fiscal year. Payment of these obligations should be made within the same year.

“This shows the superiority of cash-based budgeting against the old, inefficient system of two-year obligation-based budgeting. Simply put, under cash-based budgeting, projects get done sooner and contractors get paid faster,” outgoing Budget Secretary Benjamin E. Diokno said.

In an obligation-based budget, according to the DBM, contracts awarded before the end of the fiscal year can be delivered even after the fiscal year and the government has a running balance of not-yet-due-and-demandable obligations.

The DBM said disbursements by the Department of Public Works and Highways (DPWH) rose 46 percent to P538.2 billion.

Among the projects implemented by the DPWH last year included flood control and road and bridge networks, such as road widening, improvement and rehabilitation works.

The government also acquired combat and transport combat equipment, on top of communication and navigational facilities under the Armed Forces of the Philippines Modernization Program.

For the Department of Education (DepEd), the government rehabilitated and repaired school buildings and facilities.

Under the Department of Health (DOH), the government also built and repaired health facilities and also bought medical equipment.

“Including the program support to GOCCs [government-owned and/or -controlled corporations] and transfers to LGUs [local government units] intended for infrastructure expenditures, the infrastructure program of the government registered at P886.2 billion or 5.1 percent of GDP [gross domestic product],” the DBM said, hence surpassing the P868.8-billion infrastructure spending goal for 2018.

“We are serious in closing the infrastructure gap, owing to decades of neglect on our roads, bridges, mass transport systems and all sorts of infrastructure. ‘Build, Build, Build’ is well underway and we have delivered on our commitment to disburse at least 5 percent of GDP for public infrastructure,” Diokno said.

Under Build, Build, Build, the government would roll out 75 crucial projects, half of which are expected to be completed during President Duterte’s term.

“Take note that these are not only obligations, where it is enough to just find a contractor with project implementation coming much later. Rather, we are talking about disbursements for completed infrastructure projects. This will only increase in the coming years as we ramp up infrastructure disbursements to 7 percent of GDP by end-2022,” added Diokno, who is also the new governor of the Bangko Sentral ng Pilipinas (BSP). —WITH REPORTS FROM INQUIRER RESEARCH