STATE spending for infrastructure next year, as a percentage of economic output, remains below the 4%-5% benchmark believed needed to sustain
growth, but economic managers of the Arroyo administration said this should not be a major problem.
the regional average and prescriptions
for sustained growth. — Norman P. Aquino
Under the proposed P1.415-trillion budget submitted to Congress yesterday, the government plans to raise its infrastructure outlay by 20.67% to P147.47 billion next year, or P25.25 billion more than this year’s allocated P122.214 billion.
At P147.47 billion, however, public investment for infrastructure continues to lag behind a regional average of about 4% at 1.7% of the expected gross domestic product (GDP) for 2009.
This year, infrastructure spending accounts for 1.58% of GDP, which is projected to grow within a revised 5.5%-6.4% range.
Public sector infrastructure budgets, as against GDP, have been on a downtrend at least since 2000, documents from the House of Representatives’ Congressional Planning and Budget Department (CPBD) showed. Since the start of this decade, allocation for the sector in relation to GDP reached a peak of 3.54% in 2000 and had been below 2% since 2005, according to CPBD.
But Former Socioeconomic Planning Secretary Cielito F. Habito, current director of the Ateneno de Manila Center for Economic and Research Development, said in an interview yesterday that there could be an spike in this ratio as the 2010 elections approach, since "that’s been the pattern" in past election years like 2004 and 2007.
The World Bank has prescribed an infrastructure spending-to-GDP ratio of at least 5% for economic growth to become sustainable and to attract more investments.
While the government still eyes raising this spending level to 5.2% of GDP by 2010 under a medium-term development plan, Budget Secretary Rolando G. Andaya, Jr. yesterday noted that prevailing economic conditions do not warrant boosting outlays at a rate that would align with global yardsticks.
"Up to now, we’ve been having implementation problems with the infrastructure sector. Growth on capital outlay between January to June is only 2% year-on-year," he said in an interview. "There’s no sense in putting all those funds, when they can’t be spent withinthe year."
Mr. Andaya blamed the slow spending in the first semester on a slump in public construction, whose growth according to National Statistical Coordination Board contracted 9.5% in the first quarter year-on-year. "We identified the problems that caused the delay and, basically, it’s brought about by the increase in the price of steelWe expect infrastructure to catch up for the remainder of the year," he said.
But Mr. Habito said the government will have a lot of catching up to do in terms of public investment if it wants to sustain a 7.2% growth posted last year.
"I don’t know if the government could catch up in the remainder of the year," Mr. Habito said. "We have to have a more sustained and deliberate infrastructure spending."
Of the P147.47-billion proposed infrastructure outlay for next year, the Department of Public Works and Highways takes up the largest chunk at P99.72 billion, with roads and bridges alone accounting for P83.8 billion.
The Department of Agriculture will receive P17.315 billion, mainly for its post-harvest facilities and farm-to-market roads. The government is allocating P14.85 to the Department of Transportation and Communications; P8.5 billion to Education; P3.36 billion to Agrarian Reform Fund; P1.5 billion to Health; P1.16 billion to the Autonomous Region in Muslim Mindanao; and P1 billion to local governments.
It has also alloted P631 million for the rehabilitation of the Pasig River, P226 million to the Metro Manila Development Authority and P175.9 million to the municipal development fund.
The proposed 2009 budget assumes a P40-billion budget deficit.
The government estimates that the budget, which raises allocation for spending on agriculture by 62% to P35.8 billion, will help the economy expand 6.1%-7.1% in 2009 from a 5.5%-6.4% estimated growth this year.
Education got the biggest allocation at about P168 billion, or about 8.5% of total spending. Defense gets P65.2 billion, or aout 4.6%. Social welfare will receive a 117% increase in funding for cash payments and subsidies to families most vulnerable to soaring commodity prices. Government workers will get a pay rise, with P20 billion set aside for them.
Cost of debt servicing will fall to 21.4% of the budget next year from 22% this year and 31.6% in 2005. — with Reuters
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