Infra spending in 2016 to boost economic growth

The substantial increase in infrastructure spending this year ensures that the country will remain within investment-grade territory, and sustain strong growth performance.

infra pampanga
File photo: President Aquino during the briefing on major infrastructure projects in Pampanga

The Department of Budget and Management reported that spending for infrastructure has grown significantly over the past five years, jumping from P165 billion in 2010 to P760 billion in 2016. The infrastructure program for this year makes up 5 percent of the country’s GDP, a figure considered the international benchmark for infrastructure spending.

“Other ASEAN economies spend about 5.5 percent of their GDP on infrastructure, while we spent just a little over 2 percent from 1980 to 2009. This year, following six years of consecutive growth, we’re making headway in tackling what has been a major weakness in our investment climate,” said DBM Secretary Florencio B. Abad.

The government’s increasing investment in infrastructure was cited as a factor in the Philippines’ latest credit ratings upgrade by South Korean rating agency NICE Investors Service.

This year, the government set aside over 25 percent of the National Budget to spend on infrastructure, an increase of 29.1 percent from last year. By end of the year, 100 percent of national roads will be paved and all temporary bridges made permanent. Next year, there will be more fiscal space to fund the building and rehabilitation of local roads.

“By implementing a sustained infrastructure program, we are slowly but surely connecting towns to growth centers and farms and products to markets, making tourism areas accessible and ensuring the safety of communities. Most of all, we are sustaining our economic growth,” he added.

The government’s increasing investment in public infrastructure since 2011 has accomplished the following: 98 percent of 364,693 lineal meters of bridges have been made permanent, 85.5 percent of 32,526.5 kilometers of road have been paved and 2,862 barangay health stations have been constructed as of 2014. In addition, 86,478 classrooms have been built as of February 2015.

Transportation investments

Between 2011 and 2015, the national government completed 41 projects in 32 airports and 78 projects in 78 ports nationwide.

For 2016, P393.2 billion has been set aside to improve road transport. The projects that will be funded include the Cebu Bus Rapid Transit, Metro Manila Bus Rapid Transit, and Integrated Transport Systems Projects. Also, P9.3 billion will go towards the improvement of various air transport facilities in Clark, Panglao, Naga, Tawi-Tawi, and regional airports nationwide.

A total of P10.2 billion has also been allocated to extend and rehabilitate LRT 1 and 2, PNR North-South Projects and other repair and expansion projects. Moreover, P2.6 billion has been allocated to build and improve seaports across the country.

Private-private partnership 

Meanwhile, the Public-Private Partnership program is in full swing. As of now, 12 PPP projects have been awarded, with 14 others undergoing procurement, 2 for roll-out, and another 9 for approval and study. It’s important to note that these projects are exempt from the election ban, allowing the program to continue at full throttle until June.

Last year, disbursements for infrastructure and other capital outlays reached P436 billion, contributing significantly to the 13-percent growth in total national government disbursements—the highest figure since 2012.

According to the Philippine Statistics Authority, road and transport development helped public construction grow 20.6 percent in 2015, dwarfing the 5.4-percent growth in private sector construction. As a result, the construction industry still grew by 8.9 percent in 2015.

“While we have made great strides in infrastructure development over the past six years, we’re actively seeking out ways to spend more efficiently. The International Monetary Fund has recently recommended that we bridge the gap between project planning and budgeting, so we’re holding a forum in cooperation with NEDA and DOF with the goal of maximizing the country’s growth potential,” the Secretary said.

 —From the Department of Budget and Management