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By APD writer Melo M. Acuña
MANILA, Feb.22(APD) -- Philippines’ government spending on infrastructure as percent of Gross Domestic Product (GDP) is now twice the fiscal deficit-to-GDP ratio. Budget and Management Secretary Benjamin E. Diokno has called this feat “impressive.”
The deficit is defined as the difference of national government revenues and expenditures, has averaged 2.7% of Gross Domestic Product (GDP) in the first two years of the Duterte Administration.
Infrastructure outlays are expected to hit 6.3% of GDP, easily twice the deficit-to-GDP ratio. This means that the country’s borrowings are financing worthwhile infrastructure investments that the Filipino people can look forward to enjoying in the near future.
Secretary Diokno said the fiscal numbers reflect the government’s seriousness in closing the country’s infrastructure gap.
“Filipinos may look forward to better roads, comfortable mass transport systems like trains and modern public utility vehicles (PUVs), among other infrastructure initiatives,” he said. He explained the data support the eye test, “with so many construction projects going on around the country.”
According to historical data, infrastructure spending as percent of GDP was not a priority of previous administrations as it hit 3.0% under President Benigno Simeon C. Aquino III, 1.6% under President Gloria Macapagal-Arroyo, 1.8% under President Joseph Estrada and 1.7% under President Fidel V. Ramos, and all well below the 5.0% of GDP target for developing countries.
“The Duterte Administration has turned this around by investing an estimated 6.3% of GDP for public infrastructure in 2018 and 2018,” Secretary Diokno said. He added these numbers are consistent with the government’s goal to spend as much as 7.0% of GDP for public infrastructure by 2022.
It was learned the underinvestment in infrastructure has worsened by higher fiscal deficits for two decades and this simply suggests that for many years, government revenues were not even enough to cover current expenses.
As a prudent fiscal rule, infrastructure spending-to-GDP ratio should exceed the deficit-to-GDP ratio, according to the statement released by the Department of Budget and Management.
“We are spending above 6.0% of GDP on public infrastructure, while keeping the deficit-to-GDP ratio at less than 3%. No administration has done this before,” Mr. Diokno said.
This year, the Duterte administration has a deficit target of 3.2% of GDP and will go back to 3.0% of GDP from 2020 to 2022.
In a related development, infrastructure spending will reach 7.0% of GDP in 2022 in line with the Build, Build, Build program. Higher government spending and upgrading of infrastructure will enhance the country’s economic competitiveness, the statement from the Department of Budget and Management concluded.
(ASIA PACIFIC DAILY)