Reenacted budget stalled infrastructure buildup in March

Agencies were unable to start new projects in March—no thanks to the reenacted budget and election ban, such that government spending on infrastructure declined 5.7 percent year-on-year to P59.7 billion that month.

The latest Department of Budget and Management (DBM) data showed that public expenditures on infrastructure and other capital outlays last March dropped from P63.4 billion a year ago, although higher than the P50.3 billion spent in February.

“Despite the growth in the Department of Public Works and Highways’ (DPWH) disbursements for payment of prior years’ accounts payables for completed roads, bridges and school buildings (P11.7 billion or 42.7-percent higher year-on-year), a significant decline in capital expenditures was recorded in some agencies such as the DILG (Department of the Interior and Local Government) and DepEd (the Department of Education),” the DBM said in a report.

“The said agencies were unable to implement new capital outlay projects such as the construction of police stations, purchase of equipment under the capability enhancement program of the DILG, and repair and rehabilitation of school buildings due to limitations in release of funds under the reenacted budget,” the DBM said.

“The timing of the recording of constructive cash receipts or those goods and services directly paid to the supplier for foreign-assisted projects of the Department of Transportation-Philippine Coast Guard (DOTr-PCG) and other agencies also contributed to the lower infrastructure spending,” the DBM added.

“In March of the previous year, some P2 billion was directly paid by the Japan International Cooperation Agency (Jica) in connection with the DOTr-PCG’s maritime safety and capability improvement project. However, for this year, payments are expected in the latter quarters depending on the schedule of delivery of goods or services,” the DBM explained.

But despite the dip in March, government infrastructure spending at the end of the first quarter rose 13.4 percent to P178.1 billion from P157.1 billion during the same three-month period last year.

The DBM said the increase in end-March infrastructure expenditures was largely due to payment of prior years’ accounts payables for completed infrastructure projects.

Moving forward, the DBM said that “with the signing of the 2019 budget by the President last April 15, 2019, government spending is expected to normalize with the coming months, especially after the election ban.”

“Although the President vetoed some P95.4 billion allocations of the DPWH, the total P3.662-trillion budget for 2019 is still higher by 10.1 percent (P335.7 billion) when compared to the cash-based equivalent of the fiscal year 2018 budget of P3.326 trillion,” it said.

“Moreover, preliminary analysis of the impact of the direct veto suggests that the effect can be minimal since the vetoed items pertain to local infrastructure projects introduced after the bicameral approval of the fiscal year 2019 general appropriations bills and do not affect the national government’s flagship infrastructure projects,” it added.

Last week, the government reported that first-quarter gross domestic product (GDP) growth slowed to a four-year low of 5.6 percent mainly due to government underspending on public goods and services as it operated under a reenacted budget at the start of the year while lawmakers quarrelled about “pork barrel” and delayed the implementation of this year’s appropriations.