Infrastructure spending jumped by a third in the third quarter although the Duterte administration, as a whole, underspent during its first three months amid transition in leadership at government agencies.
The latest Department of Budget and Management data showed that expenditures on infrastructure and other capital outlays increased 33 percent to P123.2 billion during the July to September period compared with P92.6 billion a year ago. Higher infrastructure spending contributed to the 7.1-percent third-quarter economic growth, the fastest among emerging Asian economies.
In the month of September alone, the amount spent on infrastructure development rose 75 percent year-on-year to P50.5 billion.
The higher infrastructure spending last September was attributed by the DBM to “public works implemented by the Department of Public Works and Highways for the preservation and maintenance of existing road assets; capital outlay projects of the Department of Education such as construction of school buildings and repair or rehabilitation of school facilities; equipment outlays and upgrading of health facilities in Department of Health hospitals; and acquisition of military equipment under the Armed Forces of the Philippines Modernization Program of the Department of National Defense.”
At the end of the first nine months, the amount spent on infrastructure and other capital outlays totaled P352.2 billion, up 44.9 percent from P243 billion last year.
However, DBM data showed that in the first three months of the Duterte administration, the new government suffered the same problem as its predecessor—underspending.
During the third quarter, total expenditures—which besides capital outlays also include current operating expenses as well as net lending—reached P639.2 billion, 8.5-percent lower than the P698.7 billion that the government was programmed to spend during the three-month period.
Actual infrastructure spending was also lower by 22.7 percent than the program of P159.4 billion.
In a report, the DBM blamed the underspending mainly to a “slowdown in agency disbursements during the early months of the third quarter,” which the agency said was “already expected given the transition to a new administration.”
“Spending was lower than target as newly appointed heads of line agencies reviewed the operation and implementation of their programs and projects. The appointment of new heads also meant different approving authorities and signatories, which caused some temporary delays in program/project implementation,” it added.
Besides the transition, other spending bottlenecks in the third quarter included late or non-submission of billing statements from contractors and creditors, procurement difficulties such as failed biddings, as well as delayed implementation of sub-projects under programs whose implementation were likewise delayed last year or early this year, the DBM said.
Also, “P17.3 billion of the total P59.6-billion underspending in the third quarter came from savings generated from interest payments (P11.5 billion) due to bond exchange transactions made by the Bureau of the Treasury under its debt liability management program; and from minimal availments of government-owned and/or -controlled corporations for net lending assistance (P5.9 billion),” the report read.
The DBM nonetheless cited that the spending gap from July to September “is lower when compared with the underspending for the same period in 2015 at P276.4 billion (14.5 percent), and even with the first and second quarters this year at P89.2 billion (13.1 percent) and P75.2 billion (10.7 percent), respectively.”
Third-quarter disbursements were also 14.4-percent higher than the previous year’s P558.5 billion.
Moving forward, the DBM said total government spending in October would likely fall from a year ago “partly on account of one-off items such as the automated election system of the Commission on Elections and expenditures made by the government for the preparatory works and hosting of the Asia-Pacific Economic Cooperation Summit in November 2015. “
“However, spending trends show that disbursements tend to accelerate during the latter part of the year as creditors send their billings before the closing of books, and as line agencies fast track the implementation of their programs and projects towards the end of the year. This could hopefully surpass, or if not, sustain the 14.1 percent growth in disbursements recorded as of September,” according to the DBM.
At end-September, total expenditures stood at P1.86 trillion. For the entire 2016, the government must spend P2.646 trillion on public goods and services.
Duterte’s economic managers earlier brought down this year’s spending target from the Aquino administration’s previous goal of P2.995 trillion, as the DBM said the new government took into account the first-semester disbursement performance, historical spending trends, and also seasonality of expenditures after a Presidential election year./rga