Infrastructure spending increases by 45% in April

STATE SPENDING on infrastructure grew by 45% in April, on low base effect and the rollout of projects amid tightened restrictions.

Data from the Department of Budget and Management (DBM) showed infrastructure and other capital outlays rose to P58.2 billion in April from P40.1 billion in April 2020. Month on month, spending on infrastructure declined by 34% from P87.8 billion in March.

“Infrastructure spending was bolstered largely by the implementation of various infrastructure projects of the (Department of Public Works and Highways) nationwide, such as the construction and rehabilitation of access, by-pass and diversion roads, bridges, flood mitigation activities, such as slope/river bank protection and dredging works, design and building of off-site modular hospitals, and construction of linear parks and other government administrative buildings,” the DBM said.

Metro Manila and its adjacent provinces were placed under a stricter lockdown in April, although construction work both in public and private sectors were allowed to continue.

Infrastructure spending reached P253.4 billion in the four months to April, up by 29% from P196.2 billion in the same period last year.

The Budget department said completion and continuation of projects by the DPWH, especially its road infrastructure program, contributed to higher spending in the first four months of the year.

The higher expenditures were also attributed to the construction of big-ticket projects under the Transportation department, such as the first segment of the Metro Manila Subway Project and the North-South Commuter Railway Project.

ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa noted that the low base effect pushed infrastructure spending up this year as construction works were halted during the height of the lockdown in 2020.

While higher infrastructure spending is good news for the economy, Mr. Mapa said the performance failed to meet expectations, especially since the government has given top priority to its “Build, Build, Build” program.

“We were hoping for a more substantial surge in infrastructure spending given the government’s current focus on ‘Build, Build, Build’ as a stimulus measure,” he said.

“One thing that may have capped the gains in April would be the reimposition of the tighter mobility curbs in April 2021. Although less stringent than the (enhanced community quarantine) version in 2020, the renewed guidelines may have sapped some of the construction activity momentum,” he added.

Emmanuel J. Lopez, dean at the Graduate School division of Colegio de San Juan de Letran, said higher spending on infrastructure is expected to continue as the President promised to usher in the country’s “golden age of infrastructure.”

“The ‘Build, Build, Build’ program of the government, as early as 2017, has already been earmarked for spending. Hopefully, this should be given top priority by the next administration to sustain economic growth,” he said via e-mail.

The two economists believe increased infrastructure spending in April will help boost second-quarter gross domestic product (GDP).

However, Mr. Mapa cautioned that spending may slow down in the second half based on the quarterly expenditure program of the government.

Of this year’s P1.02-trillion spending plan for infrastructure, expenditures are set to peak in the second quarter at P324.974 billion, following the P243 billion spent in the first three months, based on the targets set by the Development Budget Coordination Committee (DBCC).

Spending is expected to soften to P229.54 billion in the third quarter and further down to P221.6 billion in the last three months of the year.

“This could mean that the strong growth posted in 1Q and possibly 2Q for public construction will decelerate by yearend with the economy likely missing the contribution from this sector as it continues to dig itself out of the economic slump of last year,” Mr. Mapa said. — Beatrice M. Laforga