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AMID INFRASTRUCTURE BUILDUP

DOF: Share of nat’l gov’t investment to GDP reached record high in 2018 

By: - Reporter / @bendeveraINQ
/ 03:59 PM April 10, 2019
DOF: Share of nat’l gov’t investment to GDP reached record high in 2018 

P8-TRILLION INITIATIVE Under its “Build, Build, Build” program, the Duterte administration will spend over P8 trillion during its six-year term so that the share of infrastructure spending in the country’s gross domestic product will rise to 7.4 percent in 2022. —INQUIRER FILE PHOTO

MANILA, Philippines — The government’s investments on infrastructure and other capital outlays reached a record-high P940.4 billion last year, auguring well to sustained robust economic growth in the near term, the Department of Finance (DOF) said Wednesday.

In an economic bulletin, DOF Undersecretary and chief economist Gil S. Beltran said national government investment in 2018 jumped from P685.3 billion in 2017, citing the latest Department of Budget and Management (DBM) data.

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As such, the share of national government investment to gross domestic product (GDP) rose to 5.4 percent from 4.34 percent of GDP in 2017, Beltran said.

“National government investment has been very efficient, with rates of return exceeding borrowing costs, currently at 5.9 percent per annum based on the 25-year treasury bond rate. National government investment is strongly correlated with GDP growth; the economic rate of return is computed at 29.9 percent for the current quarter’s investment and 17.4 percent for the previous quarter’s investment. This compares favorably with 9.7 percent return for current quarter’s private investment and 7.9 percent for the previous quarter’s private investment,” Beltran said, citing a regression analysis using data from 2010 to 2018.

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During project evaluation, the government uses an economic rate of return of 15 percent as the benchmark.

Beltran attributed the high economic rates of return on national government investments to “stringent” project evaluation being undertaken by the interagency Investment Coordination Committee (ICC) for big-ticket projects; “open and transparent” bidding process for procurement; and readiness of projects for implementation before the DBM allocated them budgets, which he said had “increased the efficiency of projects.”

Also, “many of these projects should have been implemented years ago,” Beltran said.

“The current congestion in the country’s roads and ports are evidence that the projects, once implemented, will have ready clientele,” he added.

For Beltran, “investment expansion has been the driving force of the economy in recent years—pushing up the country’s competitiveness and making up for previous decades of underinvestment.”

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TAGS: 2017, 2018, Business, business news, DoF, economy, GDP, Infrastructure, Investment, local news, News, Philippine news updates
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