First half infra spending up by 43.2 percent

MANILA, Philippines—The gradual easing of quarantine restrictions while allowing construction projects to resume increased government spending on infrastructure in the first half of 2021 by 43.2 percent year-on-year to P426.6 billion, which exceeded programmed spending for six months.

The latest Department of Budget and Management (DBM) data on Tuesday (July 27) showed that end-June expenditures on infrastructure and other capital outlays climbed from P297.9 billion in 2020, surpassing the P419.6-billion target by 1.7 percent.

Also, second-quarter infrastructure spending rose by a faster 63.2 percent year-on-year to P231.4 billion, which was 3.1-percent higher than the P224.4-billion intended to be spent from April to June 2021.

In June alone, infrastructure disbursements amounted to P94.4 billion, up 50.4 percent from P62.8 billion in 2020, and 19.4-percent higher than the P78.9 billion disbursed last May.

In a report, the DBM attributed the jump in June infrastructure spending to:

• Road infrastructure program of the Department of Public Works and Highways
• Spending by the Department of National Defense on military modernization
• Computerization program of the Department of Education under Bayanihan 2
• Direct payments by development partners for foreign-assisted projects of the Department of Transportation—MRT 3 repairs and Metro Manila Subway Phase 1

The first-half rise was attributed by the DBM to “the accelerated implementation of various infrastructure projects of the DPWH nationwide such as construction, repair and rehabilitation of access, by-pass, and diversion roads, bridges, and flood-mitigation structures and drainage systems.”

The above-target end-June infrastructure spending was due to “the settlement of accounts payables and faster implementation of infrastructure activities of the DPWH amid the looser community quarantine restrictions,” the DBM said.

It was unlike 2020 when the most stringent lockdown measures were imposed to contain the deadly coronavirus, the DBM noted.

Overall infrastructure program, which included subsidy and equity injected into state-run corporations as well as transfers to local government units (LGUs), disbursements from January to June totaled P535.9 billion, up 40.3 percent from P381.9 billion a year ago.

The actual total infrastructure disbursements, however, fell short by 5.6 percent against the end-June program amounting to P568 billion because of pending requests for subsidies of the BCDA, NEA, NHA and NIA.

For 2021, the government had set aside P1.02 trillion in infrastructure expenditures, including those implemented by LGUs and state corporations, equivalent to 5.1 percent of gross domestic product (GDP).

UK-based think tank Oxford Economics, in a report also on Tuesday, was bullish about the global construction sector bouncing back alongside implementation of infrastructure stimulus measures worldwide.

“Following the initial shock, the construction sector has adapted well to the threat of the virus, and we expect future waves and variants (such as the Delta variant) to become less disruptive,” Oxford Economics principal economist Nicholas Fearnley said.

For instance, Fearnley said “schemes such as Hong Kong’s $25-billion strategic infrastructure plan, the ‘Build, Build, Build’ program in the Philippines, and Indonesia’s Presidential Regulation No. 109 of 2020 will provide vital support to the sector.”

TSB