State’s 2021 infrastructure spending hits P895B

GOVERNMENT infrastructure spending rose by almost a third to P895.1 billion last year, more than the P761.2-billion target, according to Budget department data.

The agency traced the higher spending to a low base, as the state realigned funds amid a coronavirus pandemic. It was also boosted by spending on roads, flood barriers, multipurpose buildings, railways and airports, it added.

Total infrastructure disbursements, which include subsidies, equity releases to government corporations and fund transfers to local governments, hit P1.12 trillion last year, or 5.8% of economic output.

Infrastructure spending exceeded the state’s P761.2-billion target amid looser lockdowns.

For December, infrastructure spending rose by 13.9% year on year to P172.1 billion after the government built smart campuses in Marawi City in southern Philippines and released funds to modernize its armed forces.

The government spent P2.5 billion on rail under foreign-assisted projects of the Transportation department, lower than P12.6 billion a year earlier.

“The accelerated pace of government spending especially on infrastructure could be in preparation for the May 2022 elections in view of the 45-day ban on some public works from March 25, 2022,” Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said in a text message.

The election ban on public works started on Friday and will run until May 8. The law, which also prohibits social welfare dole-outs, seeks to prevent politicians from using state resources for their election campaign.

The Public Works department has sought an exemption from the ban for 18 projects worth P500 billion, the Budget department said.

Yearly infrastructure spending of at least P1 trillion or 5% of the economy would boost growth through job creation and business opportunities, Mr. Ricafort said.

The Philippine economy grew by 5.6% last year. Economic managers are targeting a 7-9% growth this year.

The national budget this year is P5.024 trillion, almost a quarter of economic ouput and 11.5% higher than last year.

Funds will be used on programs for pandemic resilience, sustained economic recovery and continued infrastructure development. Appropriations from 2021 will be available for release until Dec. 31, except funds for personnel services. — Tobias Jared Tomas