THE GOVERNMENT plans to further raise infrastructure spending to comprise a bigger percentage of the economy next year, towards a 5% ratio by 2016, a Cabinet official said yesterday.
“We’re ramping up infrastructure spending to 3% of GDP (gross domestic product) next year, up to 4.1% in 2015 and eventually to 5% in 2016, which is our goal,” Budget Secretary Florencio B. Abad said in a media briefing on the proposed 2014 national budget at his department’s headquarters in Manila.
In nominal terms, the government plans to spend P418.2 billion for infrastructure next year, P601.5 billion in 2015 and P834.5 billion in 2016, based on data of the Budget department. Public spending on infrastructure this year, at P299.4 billion, is “at around 2.5%” of GDP, Mr. Abad noted.
He noted the year-on-year increase in 2014 in programmed infrastructure disbursements — at more than 30% — “will be one of the biggest increases” for the sector.
“The rate of growth of infrastructure spending from 2012 to 2013 was 15%, while that from 2011 to 2012 was 7%. So you will see that we have been doubling our allotments — even more than double,” said Mr. Abad.
“Also, these levels do not count our PPP (public-private partnership) programs yet — only the national government, GOCCs (government-owned or -controlled corporations) and the infrastructure portion of the IRA (internal revenue allotment) of LGUs (local government units).”
Under the Philippine Development Plan, the government is looking to increase infrastructure spending to around 5% of GDP by 2016 to meet an estimated $70 billion worth of infrastructure demand from 2011 to 2016.
As of May, infrastructure spending for this year has reached P104.6 billion, up by 35.66% annually from the P77.1 billion recorded in the same period in 2012.
Asked how the government plans to implement the spending plan, Mr. Abad said his department will make sure investments go where they are needed.
“For example, our priorities are tourism, agriculture and manufacturing, among others. In our budgeting, we required agencies to plan budgets in a programmatic way, so that we determine infrastructure requirements for our priorities and make necessary allotments,” he said.
“Roads, for example, have to be oriented towards tourism zones. Fish ports, irrigation systems — they are prioritized so they are located in key production zones,” Mr. Abad noted.
This, said the Budget chief, is part of government’s commitment to spend more on capital formation — a key feature of the proposed P2.268-trillion national budget for 2014.
“The proposed budget is a budget for inclusive development. The focus will continue to be the expansion of the economy, but there is a very deliberate and conscious effort to make sure that growth promotes greater inclusion particularly of sectors not fully benefiting in the growth,” Mr. Abad said.
“Infrastructure is a big part of this, as roads improve access to services and improve productivity of various sectors. This is also part of the necessary improvement of the physical environment to enable private sector investments, so that these private investors can ably perform their role as the central engine of growth.”
Aside from infrastructure, the budget proposal also focuses on social and economic services.
“More than job creation, what we want to achieve is equalization of opportunities. We want to make sure that people have the capacity to take advantage of opportunities,” Mr. Abad said.
In his presentation of the 2014 budget proposal, Mr. Abad also gave details of the programmed expenditure and revenue levels that will support next year’s spending plan.
Revenues are projected to reach P2.018 trillion, he said, up 15.6% from this year’s P1.745-trillion program.
Bulk of this — some P1.879 trillion — will come from tax revenue collections of the Internal Revenue and Customs bureaus, while the balance will be from non-tax revenues, such as the Treasury bureau’s income from its operations, and the government’s privatization program.
Disbursements, on the other hand, will reach P2.284 trillion next year, 15.1% more than the P1.984-trillion program for this year.
This, in turn, will result in a budget deficit of P266.3 billion, which is equivalent to 2% of GDP.
The government has capped this year’s fiscal gap at P238 billion, also equivalent to 2% of the economy.
“This is all still in line with our fiscal consolidation agenda,” Mr. Abad noted.
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