Infrastructure spending reaches P507 billion in six months

The government ramped up infrastructure spending to P507 billion in the first six months of 2023, exceeding the programmed expenditure for the period, largely to finance rail and road projects, the Department of Budget and Management (DBM) said in a report by Philippine Star.

Based on the latest national government disbursement performance report of the DBM, state infrastructure expenditure and other capital outlays increased by 7.8 percent to P507.2 billion in January to June from P470.5 billion in the same period last year.

This is also five percent higher than the P483.1 billion infrastructure spending program set by the Cabinet-level Development Budget Coordination Committee for the first half.

The DBM attributed the increase to the acceleration of implementation of various infrastructure projects of the Department of Public Works and Highways nationwide.

This is also due to the direct payments made by development partners for the implementation of foreign-assisted rail transport projects of the Department of Transportation (DOTr).

The DBM noted that the expenditures offset the lower-than-expected capital outlay disbursements recorded in the Department of National Defense, mainly due to the ongoing implementation and procurement of projects.

Likewise, the DOTr cited the ongoing right-of-way and site acquisition and utility relocation that affected the implementation of its various land and rail transport infrastructure projects.

Meanwhile, overall government spending for the first half was almost flat at P2.41 trillion and was 6.6 percent below the programmed P2.58 trillion expenditure.

Apart from infrastructure, only tax expenditure managed to temper the overall underspending after it more than doubled to P6.5 billion due to the higher-than-expected documentary stamp taxes on government securities.

The rest of the expenditure items of the government fell short of the program in the January to June period.

Personnel services expenditures at P676.6 billion was below program by nearly 25 percent due to unfilled positions and delays in submission of requirements to support payroll payments and promotion of personnel in the education sector.

Likewise, combined allotment and capital transfers to local government units fell short by 1.2 percent to P461.3 billion on lower tax allotments due to the so-called Mandanas ruling of the Supreme Court.

The tax revenue base, from which the tax allotment shares of LGUs this year are determined, was the actual tax collections in 2020 – the height of the pandemic.

Interest payments inched up on a yearly basis to P282.5 billion, but this was 20.3 percent lower than the program due to settlement of premia from the reissuance of bonds.

The government also recorded lower maintenance and other operating expenses of P395 billion due to outstanding checks recorded in MOOE-heavy agencies, such as the Departments of Social Welfare and Development, Agriculture, Labor and Employment, and Health.

Delays in implementation and procurement in the sectors of social protection, health, agriculture and education were also noted.

A significant decrease in government spending was similarly noted in subsidy support to government corporations, which was 56 percent below the program at P63.7 billion.

This is due to the timing of releases to the Philippine Health Insurance Corp. and lower releases to the National Irrigation Administration and the National Housing Authority.

As of end-June, the remaining program balance amounts to P533.3 billion or 10 percent of the record P5.268 trillion 2023 budget.

The lower government spending has already impacted economic growth in the second quarter, but the DBM is still confident that disbursements will quicken in the third quarter and will go full steam during the last quarter.

The government has set a spending target equivalent to 21.3 percent of gross domestic product this year, while overall infrastructure disbursements will be equivalent to 5.3 percent of GDP.