Infrastructure spending rose at an annualized rate of 13.4 percent in the first quarter due to payables from prior years’ public projects, according to the Department of Budget and Management (DBM).
The DBM said in its latest report that expenditures on infrastructure and capital outlays (CO) have already reached P178.1 billion as of end-March, P21 billion higher than the P157.1 billion recorded last year.
The DBM attributed the increase in infrastructure spending to payment of prior years’ accounts payables for completed infrastructure projects.
For the month of March alone, infrastructure spending slid by 5.7 percent or P3.6 billion from the same month last year.
From 63.4 billion in March 2018, expenditures for infrastructure and capital outlays as of end-March this year just reached a total of P59.7 billion.
Some government agencies were “unable to implement” new projects under Capital Outlays since the government is operating under a reenacted budget.
“Despite the growth in the Department of Public Works and Highways’s [DPWH] disbursements for payment of prior years’ accounts payables for completed roads, bridges and school buildings [P11.7 billion or 42.7 percent year-on-year], a significant decline in capital expenditures was recorded in some agencies such as the Department of the Interior and Local Government [DILG] and Department of Education [DepEd],” the DBM said in its report.
“The said agencies were unable to implement new CO projects such as the construction of police stations, purchase of equipment under the Capability Enhancement Program of DILG, and repair and rehabilitation of school buildings due to limitations in release of funds under the reenacted budget,” the DBM added.
Lower infrastructure spending in March was also partly because of the timing of the recording of the Constructive Cash Receipts or those goods and services directly paid to the supplier for foreign-assisted projects of the Department of Transportation-Philippine Coast Guard (DOTr-PCG) and other agencies.
“In March [2018], some P2 billion was directly paid by the Japan International Cooperation Agency [Jica] in connection with the DOTr-PCG’s Maritime Safety and Capability Improvement Project. However, for this year, payments are expected in the latter quarters depending on the schedule of delivery of goods or services,” the DBM said.
Nonetheless, infrastructure spending also contributed largely to the overall spending performance of the national government for the first quarter. Government disbursements for the first three months of the year reached P778 billion, 0.8 percent or P6 billion more than the level from the comparable months in 2018.
Since lower infrastructure spending was recorded in March alone, NG expenditures for the same month contracted by 8.2 percent year-on-year mainly due to limitations on release of funds under the reenacted budget. This brought disbursements for March this year to P287.3 billion, lower than last year’s P313.1 billion.
Following the President’s signing of the 2019 budget last month, the DBM also said government spending is expected to “normalize with the coming months, especially after the election ban.”
The department also downplayed the potential negative impact of the President’s decision to directly veto P95.4 billion worth of allocations of the DPWH budget under 2019 national budget, saying the effect is just “minimal.”
Despite the veto, this year’s budget of P3.662 trillion is still higher by 10.1 percent or P335.7 billion when compared to the cash-based equivalent of 2018 national budget at P3.326 trillion.
While the DBM acknowledged that this could still result to lower disbursements, the reduction may “partly be offset” by payables from prior years’ infrastructure projects.
The DBM is also expecting that expenditures for Personnel Services will pick up following the issuance of the Executive Order 76, which amended EO to identify the funding source for the implementation of the fourth tranche of the Compensation Adjustment pending the enactment of the 2019 budget.
A National Budget Circular 575 has already been issued to prescribe the guidelines for the implementation of the fourth tranche Compensation Adjustment for civilian personnel in the national government.
It also provides for the charging of the requirements of the compensation adjustment against any available appropriations under the 2018 budget, as reenacted, pursuant to EO 76.
