11-month infrastructure spending down 22% to P548.8 billion
STATE infrastructure spending from January to November last year dropped by over a fifth to P548.8 billion from P703.8 billion in the same period in 2019 as Covid-19 pandemic forced the government to delay or discontinue projects.
Latest data from the Department of Budget and Management (DBM) showed government spending on infrastructure and other capital outlays falling 22 percent year-on-year.
“As expected, infrastructure and other capital outlays were lower year-on-year mainly due to the delays encountered in the implementation of public works during the imposition of Covid-19 community quarantine measures, and the discontinuance or deferment of some capital outlay projects which can no longer be implemented nor completed because of the pandemic pursuant to the Bayanihan I Law,” said DBM in its latest assessment of the national government disbursement performance.
Apart from state infrastructure spending, net lending was also down from the same cumulative period in 2019 due to conversion of national government advances into subsidy, where previous net lending releases are treated as subsidy and at the same time recorded as repayments.
Despite these, overall government spending was still up by 11.6 percent to P3.686 trillion from P3.3 trillion in the same period in 2019, driven by higher maintenance spending as a result of the implementation of Covid-19 measures.
Moreover, the allotment and capital transfers to local government units (LGUs) from one-time Covid-19 Bayanihan Grant, higher internal revenue allotment of LGUs, and releases of the annual block grant to Bangsamoro Autonomous Region in Muslim Mindanao (BARMM), also contributed to higher maintenance spending.
For November alone, state infrastructure spending also plunged by 50.2 percent to P40.3 billion last year from P80.9 billion in the same month in 2019.
Aside from the delays in public works implementation, the DBM also attributed the lower infrastructure spending in November 2020 to one-time expense in 2019 for the building construction works of the Land Transportation Office and the Land Transportation Franchising and Regulatory Board.
State spending on personnel services (PS) also slightly declined by 1.5 percent to P144.4 billion in November 2020 from P146.5 billion in the same comparable period in the previous year due to base effect of the payments made in November 2019 for the pension differential of retired military and uniformed personnel, and for the PS deficiency for the salary and allowances of newly filled positions in the Philippine National Police.
Nonetheless, overall government spending picked up by 2.3 percent to P374.1 billion in November 2020 from November 2019’s P365.6 billion.
Growth drivers for overall government spending for the month include maintenance spending, subsidy support to government corporations, allotment and capital transfers to LGUs and equity.
In the same report, DBM said it expects full-year overall government spending to settle at P4.23 trillion, 11.5 percent higher compared to P3.798 trillion in 2019 as it expected disbursements to recover from “substantial underspending” recorded as of end-September 2020.
However, DBM admitted this is still slightly lower by 2.3 percent when compared to the P4.3-trillion full-year program with the implementation of Bayanihan 2.
Last week, Finance Secretary Carlos G. Dominguez III said overall government spending rose by 11 percent to P4.206 trillion in 2020 from P3.798 trillion in 2019, citing preliminary figures from the Bureau of the Treasury.
Dominguez also revealed that the country’s emerging deficit spending last year amounted to P1.36 trillion or equivalent to 7.5 percent of the government’s projected GDP for 2020.
This is slightly below the government’s projected budget deficit for the year at P1.38 trillion or 7.6 percent of GDP, but is more than double the country’s budget deficit in 2019, which only stood at 3.4 percent of GDP or P660.2 billion.